Nam Cheong

Nam Cheong announced that it has sold four Platform Supply Vessels (PSVs) worth ~US$120m (approximately $150m) to a new customer based in Latin America. The vessels are scheduled for delivery in 2014 and are expected to contribute positively to the group’s earnings for FY13 and FY14. The latest contract win brings the group’s order book to RM1.7b, with 20 vessel sales worth RM1.7b year-to-date, versus 21 vessels for the whole of 2012. This is in line the group’s recent acceleration of its build-to-stock shipbuilding program to 28 vessels for FY14 versus 19 vessels for FY13, which could translate into higher earnings going forward. As a guide, Nam Cheong notes that the global oil and gas industry remains robust amid growing demand for energy. With global exploration and production spending expected to reach a record US$678b by 2013, expect OSV demand to continue growing. This brings the group on track to overtaking last year’s sales record. At current price, valuations remain compelling with Nam Cheong trading at 8.5x forward P/E versus regional peers at 12.5x. The street has six unanimous Buy calls on the counter with a mean TP of $0.35.