Excerpt from CGS International Securities report.
Report Summary
- Nam Cheong Limited (NCL), an offshore services provider, is initiated with an “Add” rating and a target price of S\$1.87, based on 11x FY27F P/E, offering a 57% upside from current price.
- NCL operates a fleet of 36 offshore support vessels (OSVs), mainly serving Malaysia and the Middle East, with plans to expand to 42 vessels by end-2026; over 60% of the fleet is secured on long-term charters, providing strong earnings visibility.
- The company is well-positioned to benefit from a global OSV fleet replacement cycle, aiming to secure third-party newbuild contracts and leverage its shipyard in Miri, Sarawak.
- Recent asset sales have strengthened the balance sheet, enabling debt reduction and potentially paving the way for dividend resumption by FY26F.
- Forecasts project an 8% and 11% revenue growth in FY26F and FY27F, respectively, with a 12% core net profit CAGR over FY25F-27F driven by higher utilisation, new fleet additions, and shipbuilding orders.
- Key re-rating catalysts include shipbuilding order wins, higher fleet utilisation, and dividend resumption; main risks are reduced oil & gas capex, charter cancellations, or delays in newbuild orders.
- ESG initiatives focus on safety, fuel efficiency, and emissions intensity reduction, though total emissions have risen with fleet growth.
- NCL’s financial position has improved since its 2024 restructuring, with net gearing expected to fall and future dividend payouts possible if deleveraging continues.
- The Malaysian offshore market outlook is improving with Petronas planning increased drilling activity, which could support higher vessel utilisation for NCL.
- NCL’s management team is experienced, and the company has a long track record in shipbuilding and vessel chartering across Asia and beyond.
Above is an excerpt from a report by CGS International Securities. Clients of CGS International Securities can be the first to access the full report from the CGS International Securities website : https://www.cgs-cimb.com/en
