Nam Cheong

Nam Cheong: Very strong set of results, meeting bullish estimates. 4Q12 rev at Rm 379.2m, +172% yoy and +167% qoq, while net profit at Rm 49.3m, + 87% yoy and +56% qoq. Result brings FY12 rev to Rm 876.6m, +45% yoy and net profit to Rm 136.6m, +47% yoy. Gross margins at 20% vs 23% yoy. Strong qtr was attributed to strong vessel sales in the qtr, where grp sold 9 vessesl, out of a record-breaking 21 vessels in 2012. Grp sold more Platform Supply Vessels (PSVs), which generally contributes more to rev stream due to its larger size. Rev contributions from the vessel chartering segment dropped 10%, as certain vessels were demobilised upon fulfillment of their charter contracts and later re-deployed for ensuing contracts. Grp note that its success in securing a steady number of contracts speaks vol of its unique build-to-stock model, ability to anticipate demand ahead of time, and strong track record as Msia’s largest OSV builder. These fundamentals enabled us to ride on the offshore marine boom in Malaysia. Looking forward, grp believe that investments will continue to bode well and continue to see demand for AHTS vessels, PSVs and other offshore vessels, especially in the shallow water region. Msia is expected to incur the highest offshore capex in Asia over the next 5 yrs as Petronas, has expanded its 2011 – 2015 capex plan to Rm 300b, thereby driving much of the offshore oil and gas uptrend that makes up a major component of the country’s Economic Transformation Programme. Grp’s orderbook of RM 1.3b, underpins earnings visibility till 2015-16.