UOBKayhian on 24 June 2014
FY14F PE (x): 8.1
FY15F PE (x): 6.6
Nam Cheong announced the sale of two Accommodation Work Barges (AWB) worth
approximately US$84m (S$105m), with the option to purchase another two vessels, to
a repeat customer, Perdana Petroleum Berhad (Perdana).
We revise up our 2014-15 earnings forecasts by 2% and 6% respectively, factoring in
earnings accretion from order win. Potential upside to our earnings is likely if Perdana
exercises its options for purchase of two more vessels.
Maintain BUY with a higher target price of S$0.47 (previous: S$0.44), pegged at 8.0x
to our revised 2015F PE. Our target PE is a 15% premium to peers’ long-term mean of
7.0x, which we think is justified given Nam Cheong’s dominant 50-75% market share in
the high barriers-to-entry Malaysian OSV shipbuilding market.
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