Nam Cheong poised to report its 'best ever quarter'

Earnings seen to surge 60% to MYR50m.

According to OSK, Nam Cheong will announce its 3Q13 results next Tuesday morning. OSK expects earnings to surge 60% y-o-y and 24% q-o-q to MYR50m for the company’s best ever quarter. 

This will be largely contributed by healthy vessel sales in 3Q and a record orderbook that provides a high base for revenue recognition. These results and stronger guidance should take the stock to new heights.

Here's more:

Record orderbook and robust vessel sales. Nam Cheong (NCL) has a MYR1.7bn-strong orderbook, which provides a growing base of revenue recognition every quarter. It has sold 20 vessels YTD, just one vessel shy of matching last year’s record.

Quarterly bottomline to set new record. We expect the company to report 3Q earnings at least MYR50m, setting a new quarterly profit record. This will take the company’s 9M13 earnings to MYR127m, thus meeting 69% of our FY13F estimate.

All said, we also expect NCL to end the year with a similarly strong 4Q.

Street needs to raise estimates. Street expectations of NCL’s FY13F results range from MYR162m-188m and averages MYR173.6m. We see likely upgrades on those figures, albeit at the lower end of the range.

Results, stronger guidance may take shares to new high. NCL shares have not moved much over the last half-year although the company has continued to build value through selling more vessels.

We believe that the upcoming set of results will be a strong catalyst to spark a rally in its share price to new heights. Its management’s positive guidance might also be support the stock’s price appreciation.