Nam Cheong

Nam Cheong: In a feature in Malaysian newspaper The Star, Nam Cheong CEO Mr Leong Seng Keat guides that it expects offshore activity in shallow waters to remain fairly recession-proof in the near term. This is because oil majors are moving into the production phase, keeping OSV players busy. In that interview, Mr Leong guides that it could sustain the 20%-30% growth momentum over the next few years. Regarding recent news that oil majors scaling back on E&P spending this year on soaring costs and diminishing returns, Mr Leong quips that shallow water operations are less vulnerable as it has a lower cost of production per unit. Broadly, the investment thesis of Nam Cheong remains intact, where the OSV player expects to continue benefitting from Petronas’ RM300b 2011-15 capex spending program. Nam Cheong is currently trading at 8.2x forward P/E and has 8 straight Buys with a mean TP of $0.46.