Nam Cheong

Nam Cheong: Maybank-KE initiate coverage on Nam Cheong with a BUY rating and TP of $0.37, pegged to 9x PE. House sees Nam Cheong benefiting from (1) a recovering Offshore Support Vessel (OSV) market, (2) OSV replacement cycle, (3) Petronas’ Oil & Gas capex and (4) its foresight in reading the supply-demand dynamics of the sector. Expect the company to deliver 16% EPS CAGR over FY13-15F as vessels in its ramped-up newbuild programs are readily absorbed by the market. At current share price, the stock is trading at only 6.1x/6.6x FY14F/15F PEs, inexpensive considering the robust growth prospects. Also see possibility of higher dividend payout in FY14F translating into a yield of about 5%.