FY12F PE (x): 7.2
FY13F PE (x): 6.6
We hosted a non-deal roadshow for Nam Cheong on 2 October in Kuala Lumpur.
Vessel sales to increase 60-70% in 3-5 years. Nam Cheong has medium and long-term plans to increase its regional market share by securing more customers in the Middle East, West Africa and Asia. We believe Nam Cheong’s shipbuilding programme could increase from 18 and 19 vessels to be delivered in 2012 and 2013 respectively to 30 vessel deliveries per year in 3-5 years’ time.
Maintain BUY and target price of S$0.30, implying a 46.3% price upside. Our target price is pegged at 9.7x 2013F PE (2013F EPS: 7.7 sen or 3.1 S cents). Our target PE is 1.3SD above peers’ long-term PE mean of 7.0x, which we deem to be justified given Nam Cheong’s dominant 50-75% market share in a high barrier-to-entry market.
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Background
- is a Malaysian-based international leading offshore marine group specialising in the building of offshore support vessels (“OSVs”).
- it owns and operates one of the largest shipbuilding yards for OSVs in Malaysia and focus on the construction and engineering of complex, sophisticated, environmentally friendly and quality OSVs that are equipped with the latest technology.
- A strong presence in Malaysia, Southeast Asia, the Middle East, China, The Netherlands, India and USA
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