Nam Cheong

DMG & Partners, July 1

NAM Cheong has sold four vessels worth US$92 million in total: three 3,000 deadweight tonne (dwt) platform supply vessels (PSVs) and an accommodation work boat (AWB). The three PSVs are of the 3,000dwt series being built in China and come equipped with dynamicpositioning system 2 (DP2).

We see such technology becoming a key requirement for offshore work today. The AWB, also being built in China, comes with room capacity for 200 men.

These wins raise Nam Cheong's orderbook to RM1.7 billion (S$661.3 milion) on a gross basis. We estimate a net orderbook of RM1.6 billionn before 2Q14 recognitions. The vessels are scheduled for delivery between FY14 and FY15.

The AWB was sold to a subsidiary of a new customer, North Africa-based Maridive and Oil Services SAE. We note that Nam Cheong has been successful in opening up the Middle East North Africa (MENA) market in recent years.

Nam Cheong is one of our top picks in the offshore and marine sector. We further note that consensus estimates imply almost zero growth between FY15-FY16F, with upgrade potential should the company exceed street expectations. Maintain S$0.53 TP, which is based on 10 times blended FY14/15F P/Es.

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