Nam Cheong

Nam Cheong: ($0.38) Secured LOI worth US$186m for newly-launched proprietary AHTS Nam Cheong secured letters of intent from five customers worth US$186m, comprising a mix of sale and charter of 12 newly-launched proprietary anchor handling tug supply vessels, NCA80E. In addition, Nam Cheong also secured options to sell an additional eight of the newly launched vessels. Customers include Bumi Armada, Geooffshore, Opstad, Sofield Marine & Offshore as well as Vega Offshore. The 20 NCA80E vessels are currently being constructed as part of Nam Cheong’s built-to-stock series in the group’s Miri shipyard in Sarawak, East Malaysia as well as the Group’s subcontracted yards in China. The sale (upon the execution of the contracts) is expected to contribute positively to FY14-16 earnings. Assuming the LOI gets effected, this will bring Nam Cheong's total order book to RM2.5b, which stretches revenue visibility over the next two to three years. We also note that some houses have been recommending investors to accumulate the stock ahead of its 3Q14 results, which is expected to achieve its highest quarterly net profit, buoyed by recent vessel sales.