Nam Cheong Limited Q3 & 9M 2025 Financial Review: Recovery Continues Amid Challenging Environment

Nam Cheong Limited, a major offshore support vessel (OSV) player listed on the Singapore Exchange, released its unaudited condensed interim financial results for the third quarter and nine months ended 30 September 2025. The results reflect the company’s ongoing recovery following a major restructuring in 2024, set against a backdrop of continued industry challenges and evolving market dynamics.

Key Financial Metrics

Historical Performance Trends and Notable Events

• Revenue and Profit Trends: Revenue and gross profit for both Q3 and 9M 2025 declined year-over-year, primarily due to lower vessel utilization amid industry headwinds.
• Exceptional Items in Previous Year: The sharp YoY drop in net profit and EPS is primarily due to the absence of exceptional income recognized in 2024, notably a significant gain on waiver of debts (RM393 million) and reversal of inventory write-downs (RM72.5 million), which did not recur in 2025.
• Debt Restructuring: The group completed a major debt restructuring scheme in March 2024, involving significant conversion of debt into equity and extension of loan maturities. This has normalized finance costs and stabilized the balance sheet.
• No Dividends: No dividends were declared for the period, consistent with the company’s focus on strengthening its financial position post-restructuring.
• Share Issuances: The company issued 2.94 million award shares under a management incentive plan in April 2025. No share buybacks or sales of treasury shares occurred during the quarter.
• Legal/Litigation Expense: The company incurred a litigation settlement expense of RM10.6 million in 9M 2025, impacting other operating expenses.
• Asset Growth: Total assets increased 4% from RM1.28 billion at FY2024 to RM1.33 billion at 9M2025, mainly due to higher property, plant and equipment from retrofitting and dry-docking as well as increased inventories from vessels under construction.
• Improved Cash Collection: The group collected RM94.4 million (40.2%) of its net trade receivables subsequent to 9M2025, reflecting some improvement in working capital management.

Chairman’s Statement and Outlook

“The local OSV market continues to face structural supply constraints. While the existing fleet is ageing, new vessel construction remains subdued, primarily due to banks’ continued caution in extending financing for newbuild programs. Malaysia’s cabotage policies, which limit foreign vessel participation, further restrict available supply. As a result, OSV charter rates are expected to remain well supported in 2026. Equipped with the largest and the most advanced OSV fleet on Malaysian waters, capable of supporting both production and exploration projects, the Group remains cautiously optimistic about its long-term growth prospects and will continue to stay agile in capturing emerging opportunities. Progressing through 2H2025, increased clarity on U.S. tariff policies has helped create more certainty and confidence towards the global economy. The Organisation of the Petroleum Exporting Countries (“OPEC”) oil output continued to rise steadily, reaching 28.43 million barrels per day in October 2025, up 30,000 bpd from September 2025.”

The tone is cautiously optimistic, highlighting structural strengths in the OSV market, supportive charter rates, and the company’s leading market position, but also acknowledging industry uncertainties and the need for financial prudence.

Related Party Transactions and Other Corporate Actions

• Related-party transactions during the period were limited and conducted at arm’s length. No unusual fund flows were reported.
• No IPOs, major asset sales, or divestments were undertaken in the period.
• Directors’ remuneration amounts were not specifically disclosed.

Conclusion & Investment Recommendation

Nam Cheong’s financial performance in 2025 reflects normalization post-restructuring, with core profits down primarily due to lower vessel utilization and the absence of large one-off gains from 2024. The balance sheet is healthier, with debt levels reduced and extended, and the OSV market outlook remains cautiously positive. However, near-term earnings growth may be constrained by industry headwinds and the need to rebuild operational momentum.

• If you are currently holding Nam Cheong stock:
  • Hold. The company is on a firmer financial footing post-restructuring, and the OSV market is expected to remain tight, supporting charter rates. However, patience may be required as earnings recovery could be gradual.
• If you are not currently holding Nam Cheong stock:
  • Wait. While the restructuring risk has receded and the medium-term outlook is improving, near-term earnings are still recovering and the absence of dividends may make the stock less attractive in the short term. Consider monitoring for signs of sustained earnings growth and improved vessel utilization before initiating a position.

Disclaimer: This analysis is based strictly on information presented in the company’s Q3 and 9M 2025 financial report and does not constitute investment advice. Investors should conduct their own research and consult a qualified financial adviser before making any investment decisions.

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