Taking our cue from its lacklustre sales in 1Q15, we downgrade Nam Cheong from Add to Hold. We concede that we were over-bullish in expecting Nam Cheong to sustain its 2014 sales momentum. We previously expected it to sell around 30 vessels p.a. in 2015-17. We now expect Nam Cheong to sell 19-22 vessels in 2015-17, which would bring sales to 2012 levels (the year of recovery for the OSV sector). This, coupled with the scaling back of shipbuilding gross margins from 17.7% to 17%, leads us to cut FY15-17 EPS by 7-23%. Our target price, still based on 7.5x CY16 P/E (1 s.d. below the 5-year mean of small/mid-cap oil services companies), drops accordingly. We would revisit the stock upon stronger-than-expected vessel sales and earnings.