Nam Cheong's Q3 profit doubles to RM126.29m

Singapore

OFFSHORE marine group Nam Cheong's net profit more than doubled to RM126.29 million (S$48.68 million), up from RM58.69 million previously, for the third quarter ended Sept 30, on the back of higher revenue.

Revenue surged 81 per cent to RM618.62 million as both its shipbuilding and vessel chartering businesses reported higher revenues. Earnings per share worked out to 6.01 Malaysian sen, rising from 2.79 sen previously.

Nam Cheong's key revenue driver, its shipbuilding segment, recorded an 86 per cent leap in revenue to RM595.1 million thanks to order wins for 16 vessels. Its vessel chartering business chalked up a 9 per cent rise in revenue to RM23.5 million as its fleet grew by the net increase of one vessel.

While cost of sales was up 85 per cent to RM469.9 million, gross profit was 70 per cent higher at RM148.73 million in line with higher revenue and healthy gross profit margins. Operating profit for the quarter came to RM134.96 million, slightly more than double that of Q3 2013.

Meanwhile, selling and administrative expenses came down 34 per cent to RM$14.88 million, while finance costs rose from RM$1.53 million to RM$7.54 million due to the issuance of additional medium term notes in Q3 2014.

Nam Cheong has secured a record order of 25 vessels worth about US$505 million year-to-date, as well as letters of intent totalling US$186 million for its proprietary designed diesel-electric powered anchor handling tug supply vessels.

Group chief Leong Seng Keat said: "Nam Cheong is seasoned in weathering both downturns and buoyant periods in the offshore and marine industry evidenced by our long operating history. Moreover, we operate in the highly resilient shallow water segment which we deem as recession proof due to the lower cost of oil production compared to the deepwater segment."

Its order book for offshore support vessels (OSVs) stands at RM$1.9 billion as at Sept 30, stretching till 2016.

"We see growing demand for modern OSVs. By optimising our vessels for fuel efficiency, we help put our customers in a better position to win jobs, particularly in periods of low oil prices when the oil majors are likely to face margin squeeze," he added.

Shares in Nam Cheong closed unchanged at 41 Singapore cents in the stock market on Tuesday.