Nam Cheong Limited delivered a record set of results for FY13, with revenue and PATMI growing 43.5% and 50.6% to MYR1,257.5m and MYR205.6m, respectively. The latter exceeded our FY13 forecast by 9.8%. This was partly due to a one-off reversal of deferred tax, excluding which Nam Cheong’s FY13 profit before tax (PBT) of MYR199.2m (+43.8%) would have been 2.0% above our PBT forecast. Management guided that it is targeting to deliver 35 vessels worth a total of US$700m in FY15, ahead of our estimate for 32 vessel deliveries, and also higher than its FY14 target. We lift our target PER peg from 8.5x to 9.5x in recognition of Nam Cheong’s solid execution track record and robust industry outlook. Applying this to our FY14F EPS estimate which has also been raised by 4.9%, we derive a higher fair value estimate of S$0.42 (previously S$0.37) on Nam Cheong. Maintain BUY.
Record results delivered
Nam Cheong Limited reported 4Q13 revenue of MYR406.2m, representing a YoY increase of 7.1%. PATMI jumped 42.8% to MY70.5m, such that FY13 revenue and PATMI grew by 43.5% and 50.6% to MYR1,257.5m and MYR205.6m, respectively. This was a record high for the group. The latter exceeded our FY13 forecast by 9.8%. This was partly due to a one-off reversal of deferred tax, excluding which Nam Cheong’s FY13 profit before tax (PBT) of MYR199.2m (+43.8%) would have been 2.0% above our PBT forecast. A special dividend of 0.5 S cent/share was declared, on top of a first and final dividend of 0.5 S cent/share, bringing total FY13 DPS to 1 S cent, and translates into a yield of 2.9%.
Guidance on 35 vessels for FY15 shipbuilding programme
Nam Cheong saw record order wins of 24 vessels in FY13 which amounted to ~US$500m, surpassing its 2012 record order win of 21 vessels. 20 vessels were delivered to its customers in 2013. Its order book value stood at MYR1.5b, as at 26 Feb 2014, of which MYR1.4b remains unrecognised. Management guided that it is targeting to deliver 35 vessels worth a total of US$700m in FY15, ahead of our estimate for 32 vessel deliveries. This was also higher than FY14’s target of 30 vessels with an aggregate value of US$600m.
Maintain BUY
Looking ahead, we expect Nam Cheong to be a key beneficiary of Petronas’ aggressive capex plans; while the global replacement cycle of aging OSV fleet will also aid Nam Cheong’s order wins momentum. We lift our target PER peg from 8.5x to 9.5x in recognition of Nam Cheong’s solid execution track record and robust industry outlook. Applying this to our FY14F EPS estimate which has also been raised by 4.9%, we derive a higher fair value estimate of S$0.42 (previously S$0.37). Maintain BUYon Nam Cheong, which remains as one of our top picks within the oil and gas sector.
Nam Cheong Limited reported 4Q13 revenue of MYR406.2m, representing a YoY increase of 7.1%. PATMI jumped 42.8% to MY70.5m, such that FY13 revenue and PATMI grew by 43.5% and 50.6% to MYR1,257.5m and MYR205.6m, respectively. This was a record high for the group. The latter exceeded our FY13 forecast by 9.8%. This was partly due to a one-off reversal of deferred tax, excluding which Nam Cheong’s FY13 profit before tax (PBT) of MYR199.2m (+43.8%) would have been 2.0% above our PBT forecast. A special dividend of 0.5 S cent/share was declared, on top of a first and final dividend of 0.5 S cent/share, bringing total FY13 DPS to 1 S cent, and translates into a yield of 2.9%.
Guidance on 35 vessels for FY15 shipbuilding programme
Nam Cheong saw record order wins of 24 vessels in FY13 which amounted to ~US$500m, surpassing its 2012 record order win of 21 vessels. 20 vessels were delivered to its customers in 2013. Its order book value stood at MYR1.5b, as at 26 Feb 2014, of which MYR1.4b remains unrecognised. Management guided that it is targeting to deliver 35 vessels worth a total of US$700m in FY15, ahead of our estimate for 32 vessel deliveries. This was also higher than FY14’s target of 30 vessels with an aggregate value of US$600m.
Maintain BUY
Looking ahead, we expect Nam Cheong to be a key beneficiary of Petronas’ aggressive capex plans; while the global replacement cycle of aging OSV fleet will also aid Nam Cheong’s order wins momentum. We lift our target PER peg from 8.5x to 9.5x in recognition of Nam Cheong’s solid execution track record and robust industry outlook. Applying this to our FY14F EPS estimate which has also been raised by 4.9%, we derive a higher fair value estimate of S$0.42 (previously S$0.37). Maintain BUYon Nam Cheong, which remains as one of our top picks within the oil and gas sector.
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