Nam Cheong Limited’s revenue and net profit increased by 14% and 8% YoY to RM234.7m and RM35.8m respectively. Gross margin declined to 18.6% from 22.6% in the year-ago period, mainly due to lower utilization of its vessel fleet. The group also had a disposal gain of RM2.8m, relating to one SSV. Separately, Nam Cheong announced the sale of five vessels worth US$110m, relating to one 5,150 bhp AHTS and four PSVs. The group, which already has an existing net order-book of RM1.3b, plans to expand its shipbuilding programme to 28 vessels for 2014 (2013: 19 vessels). We continue to like the group for its growth profile and keep our BUY rating and fair value estimate of S$0.30 unchanged.
1Q net profit up 8%
Nam Cheong Limited’s revenue and net profit increased by 14% and 8% YoY to RM234.7m and RM35.8m in 1Q13 respectively. Gross margin declined to 18.6% from 22.6% in the year-ago period, mainly due to lower utilization of its vessel fleet. The group also had a disposal gain of RM2.8m, relating to one SSV. Interest expenses jumped 67% YoY to RM6.5m largely due to its recent S$110m MTN issuance. As of end Mar 2013, net gearing was 0.25x, but we expect the ratio to increase going forward as its shipbuilding programme gets underway.
Vessels undergoing routine docking
In terms of business segments, shipbuilding revenue and gross profit increased by 17.4% and 4.2% YoY to RM228.3m and RM39.8m respectively, driven by the completion and delivery of five vessels compared to just two vessels in the year-ago period. On the other hand, vessel chartering revenue and gross profit fell by 42.4% and 52.4% YoY as three vessels had undergone docking for routine survey as required by the Classification Society. Looking ahead, management believes that the impact of drydocking will not be as significant.
Sale of five vessels worth US$110m
Separately, Nam Cheong announced the sale of five vessels worth US$110m, relating to one 5,150 bhp AHTS and four PSVs. The group, which already has an existing net order-book of RM1.3b, plans to expand its shipbuilding programme to 28 vessels for 2014 (2013: 19 vessels). We continue to like the group for its growth profile and keep our BUY rating and fair value estimate of S$0.30 unchanged.
Nam Cheong Limited’s revenue and net profit increased by 14% and 8% YoY to RM234.7m and RM35.8m in 1Q13 respectively. Gross margin declined to 18.6% from 22.6% in the year-ago period, mainly due to lower utilization of its vessel fleet. The group also had a disposal gain of RM2.8m, relating to one SSV. Interest expenses jumped 67% YoY to RM6.5m largely due to its recent S$110m MTN issuance. As of end Mar 2013, net gearing was 0.25x, but we expect the ratio to increase going forward as its shipbuilding programme gets underway.
Vessels undergoing routine docking
In terms of business segments, shipbuilding revenue and gross profit increased by 17.4% and 4.2% YoY to RM228.3m and RM39.8m respectively, driven by the completion and delivery of five vessels compared to just two vessels in the year-ago period. On the other hand, vessel chartering revenue and gross profit fell by 42.4% and 52.4% YoY as three vessels had undergone docking for routine survey as required by the Classification Society. Looking ahead, management believes that the impact of drydocking will not be as significant.
Sale of five vessels worth US$110m
Separately, Nam Cheong announced the sale of five vessels worth US$110m, relating to one 5,150 bhp AHTS and four PSVs. The group, which already has an existing net order-book of RM1.3b, plans to expand its shipbuilding programme to 28 vessels for 2014 (2013: 19 vessels). We continue to like the group for its growth profile and keep our BUY rating and fair value estimate of S$0.30 unchanged.
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