Nam Cheong

Nam Cheong: DMG has a 3Q12 results preview. Says “very strong 9M12 results incoming”; expects Nam Cheong to report RM30 – 34m of profits this qtr, bringing 9M12 profits to RM 86-90m, ~30% up yoy. Notes yoy, 3Q12 will be below 3Q11’s RM46.8m, as Nam Cheong sold 5 vessels in this qtr vs 8 vessels in the same period last yr. However, taking into account the latest orders of 2 PSVs sold early last mth, DMG expects Nam Cheong to be sitting on > RM110m in profits, already beating FY11 profits by at least 20% before the year is out. On the recent issue of $110m in bonds last mth, DMG notes two possibilities, i) an increase in the shipbuilding programme for FY14e beyond its original projects, and/ or, ii) acq of business assets. Notes either would provide further upside to future earnings. The house says Nam Cheong is still very cheap, at only 6.6x FY13e P/E, low for a co growing at 30% a year. Results due next Monday morning.