Nam Cheong reported a 20% YoY fall in revenue to RM326.3m and a 45% drop in net profit to RM39.3m in 1Q15, such that the latter accounted for 14% of ours and the street’s full year estimates, below expectations. Gross profit margin for the shipbuilding segment was, however, consistent with 1Q14 at 20%, and overall gross profit margin was maintained at 21%.

As at 31 Mar 2015, the group had an order book of about RM1.6b with deliveries till 2016. Pending an analyst briefing, we maintain our HOLD rating but put our fair value estimate of S$0.30 under review.

Source: OCBC Research - 14 May 2015