Nam Cheong's ship comes in, profit up 55 per cent

Buoyant demand for its vessels sent second-quarter earnings soaring by 55 per cent at offshore marine player Nam Cheong.

Net profit came in at RM63.3 million (S$25 million) on the back of a 38 per cent spike in revenue to RM378.8 million for the three months ended June 30.

The company, which is Malaysia's largest offshore support vessel builder, announced yesterday that its core shipbuilding business achieved a 37 per cent rise in revenue to RM355.6 million. The improvement was mainly attributable to the progressive recognition of revenue from the sale of platform supply vessels, which added RM228.5 million or 60 per cent to total shipbuilding revenue.

Revenue from vessel chartering expanded 44 per cent to RM23.2 million, thanks in part to the addition of two new vessels to its chartering fleet.

The shipbuilding division contributed 94 per cent of Nam Cheong's top line while chartering accounted for 6 per cent.

Earnings per share was 3.01 sen in the second quarter, up from 1.94 sen previously, while net asset value per share was 47.6 sen at the end of June, up from 44.6 sen at the end of December.

It did not declare any interim dividend.

Executive chairman Tiong Su Kouk said: "This solid set of financial performance points to the buoyant demand for our vessels amidst increasing opportunities in the industry."

Nam Cheong said the outlook for the exploration and production sector remained upbeat, boosting demand for the offshore industry.

It added that offshore support vessel operators in its core market of Malaysia may benefit from national oil firm Petronas' capital expenditure push.

Chief executive Leong Seng Keat said: "As a key driver in Malaysia's oil and gas industry, Petronas seeks to rejuvenate mature assets and develop marginal oilfields, having pledged US$14 billion (S$17.5 billion) to enhanced oil recovery projects.

"This development allows us to capitalise on our strong links with oilfield service companies in Malaysia which will enable Nam Cheong to secure vessel orders."

The company's order book as at July 1 stood at about RM1.7 billion, with orders for both shallow and deep water offshore support vessels with deliveries up to next year.

Nam Cheong shares closed a cent lower at 46.5 cents yesterday. The company reported its earnings before markets opened.

At a glance

Revenue: RM378.8 million (+38 per cent)

Net profit: RM63.3 million (+55 per cent)

Dividends: -

feimok@sph.com.sg

This article was first published on August 9, 2014.
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