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Tuesday, August 13, 2013

Nam Cheong posts strong Q2 results


SINGAPORE: Nam Cheong Ltd, a leading global offshore marine player, has reported a strong results performance for the 2Q 2013 with a 83 per cent surge in net profit to RM41.1 million from RM22.5 million in the corresponding period of last year.

Listed on the Main Board of the Singapore Exchange Securities Trading Ltd (SGX-ST), Nam Cheong is Malaysia’s largest Offshore Support Vessel(OSV) builder.

Robust vessel sales saw revenue growth of 84 per cent to RM275.3 million in the 2Q 2013, from RM149.8 million previously.

Its executive chairman, Datuk Tiong Su Kouk, said:"Our strong financial performance is a clear indicator that we are one of the key beneficiaries of the uptick in booming offshore activities in Malaysia.

"As the country’s largest OSV builder, we are strategically placed to tap growth opportunities in this sector, leveraging on strong relationships with long-standing blue chip customers and building new ones.

"Our close ties with Petronas-licensed companies, for example, continue to give us a competitive edge in securing contracts. At the same time, close interaction with all customers, keeps us keenly attuned to market trends in the OSV sector," he said in a statement.

Group chief executive officer, Leong Seng Keat, meanwhile said having strong market intelligence is one of the key success factors of the company's unique and effective business model, which focuses on both the higher margin built-to-stock as well as built-to-order series of vessels.

"By accurately forecasting market demand and building the right vessels ahead of time, we are able to close the gap for ship operators, helping them enhance their winning capabilities.

"In the 2Q 2013, a significant portion of the increase in shipbuilding revenue came mainly from the progressive recognition of revenue derived from PSVs sold.

"Our shipbuilding programme has 12 PSVs for delivery in 2013 as compared to only two in 2012.

"This is a clear indication that we have accurately forecasted an increase in demand for this vessel type, with the shift of exploration and production(E&P) activities, away from near shore projects to deeper water due to a depletion of oil reserves," he added.

With the Group’s healthy balance sheet and strong cash position of RM214.1 million, Nam Cheong, headquartered in Kuala Lumpur, is well-positioned for growth.

In addition, the Group’s net gearing ratio was reduced to 0.31 times as at June 30, 2013, from 0.38 times as at December 31, 2012, providing a healthy headroom for growth.

Touching on the outlook, Leong said an increase in E&P spending coupled with a healthy OSV order book level, as well as the ongoing OSV replacement cycle, were positive growth drivers for the company.

"We sold a total of 16 vessels worth US$311.6 million in the first seven months of 2013, surpassing the seven worth US$166.2 million during the same period last year.

"With increased activities by oil majors, we believe that we are on track to surpass our record high of 21 vessel sales achieved in 2012," he added.

He said Nam Cheong continues to see a clear rising trend especially for Anchor Handling Tug Supply Vessels (AHTS) and Platform Supply Vessels (PSV).

As a leading player in the construction of mid-size PSVs, he said Nam Cheong was benefiting from the growing demand in this sector of the industry and would continue to engage in businesses related to top side maintenance, hook up and commissioning and exploitation of reserves from marginal fields.

"Notably, as we progress, Nam Cheong has become even more international in its approach, securing new customers from regions such as West Africa, Brazil and Cyprus.

" This has increased our global footprint from existing markets such as the United States, Europe and the Middle East. We are in a strong position to tap future opportunities not only in Asia but also internationally," Leong added.

As at August 13, 2013, the Group’s order book was approximately RM1.4 billion in value, with 22 vessels contracted for recognition up to 2015.

The Group’s shipbuilding programme comprises a mix of OSVs for shallow and deep water, for deliveries beyond 2014. -- BERNAMA

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