Nam  Cheong  announced  that  it  has  sold  two  Platform  Supply  Vessels (PSVs)  for  a  combined  US$52.1m  to  two  new  African  customers.  They  are scheduled  for  delivery  in  1Q  2013.  With  these  orders  in  hand,  our  model informs  us  that  Nam  Cheong  has  leapfrogged  the whole of FY11's RM93m net profit, sitting on about RM110m of net profits at the present moment.

Sold  two  high-value  vessels.  Nam  Cheong  announced  yesterday  that  it  has sold  a  3000dwt  PSV  and  a  5000dwt  PSV  for  a  combined  US$52.1m  to  be delivered  within  six  months.  These  are  among  the  highest-value  vessels  Nam Cheong is currently building.

New  market,  new  customers.  In  August,  Nam  Cheong  sold  its  first  vessel,  a 3000dwt PSV, to the West African market, opening its foray into this new region. The  sale  of  these  two  PSVs  to two  new  customers  is a  strongly  positive  sign  of acceptance among the vessel owners in Africa.

Exceeded  FY11  profits.  We  expect  these  two  vessels  to  contribute  at  least RM20m  to  the  bottom  line,  using  conservative  assumptions.  After  tweaking  for various  vessel  recognition  stages,  our  model  now  shows  that  while  3QFY12F results would be below 3QFY11's record RM46.8m, the full 9MFY12F bottom line should come out to the RM85-90m region. Adding this RM20m to the score, Nam Cheong today is already sitting on about RM105-110m in profits, well exceeding FY11's RM93.2m.

Maintain Buy with unchanged TP $0.290. Nam Cheong has run up a good 23% since our initiation, but we still see deep value in this company. Our TP is pegged to  merely  8.5x  FY12F/13F  blended  EPS,  which  is  far  from  demanding  for  a company with a 2-year projected EPS CAGR of 38%.

 Source: OSK