Nam Cheong secures sales of four vessels and forms new JV

Nam Cheong Limited announced this morning that it has clinched sale contracts for four vessels under its build-to-stock model worth an aggregate ~US$90m. YTD, Nam Cheong has sold 17 vessels, and remains on track to exceed the 24 vessels sold in FY13. Its current order book consists of 29 vessels worth ~MYR2b. The vessels sold consist of one 5,000 DWT PSV to Bumi Armada, one 6,000 BHP AHTS to a new customer based in Vietnam, one 5,000 BHP AHTS to Time Marine Services Sdn Bhd, and one 200-men Accommodation Work Vessel (AWV) to its newly formed JV with Marco Polo Marine. All the four vessels are equipped with DP2.

Meanwhile, in a separate announcement, Nam Cheong also said that it has entered into a JV and collaboration agreement with Marco Polo Marine to jointly co-operate and collaborate in the investment, funding, ownership and operation of vessels. Nam Cheong will acquire a 50% stake in the JV for a total consideration of US$2m. The AWV sold by Nam Cheong to the new JV has already secured a long-term firmed five-year bareboat contact with an estimated value in excess of US$27m. Maintain BUY and S$0.55 fair value on Nam Cheong.