Nam Cheong

Nam Cheong: DBSV maintains Buy but raises TP to $0.52 from $0.47. The houseexpect more contracts in 2H14, with management estimating about two-thirds of vessel sales are to repeat customers, which is proof of its vessel quality and the reason why Nam Cheong can successfully execute its built-to-stock business model. And that is not only in Malaysia where it has excellent relationships with O&G services providers; Nam Cheong has also secured repeat orders from customers in new geographies like West Africa, and hopes to do the same with markets like Mexico. Given the recent built-to-order contracts for two large accommodation work barges from Malaysian repeat customer Perdana Petroleum, the house revised up its FY14F/15F earnings by 1%/ 3%. And with the improved visibility and RM1.7bn orderbook for 25 vessels now, roll over its valuation base to blended FY14/15 earnings to derive a higher TP of $0.52, pegged to 10x PE.