Here's how Nam Cheong will milk benefits from Malaysia's offshore projects

30 vessels required for the Pan Malaysian hook-up.

According to UOB Kay Hian, Nam Cheong can be viewed as a key beneficiary of a recent pick-up in Malaysian offshore activity, being the largest Malaysian OSV shipyard with 50-75% domestic market share. 

UOB adds, OSV tendering activity is expected to pick up on the back of Petronas’ 34 vessel requirements in 2013, coupled with about 30 additional vessels required for the Pan Malaysian Hook-Up and Commissioning project. 

Here's more:

Petronas ramps up OSV tenders. Our channel checks suggests that Petronas is planning to issue tenders for 34 offshore support vessels (OSV) in 2013, up from about 20 in the previous year.

Of the 34 tenders in the pipeline, 24 have been issued ytd and 15 have already been awarded. Recently, Malaysian vessel owners Alam Maritim (AMRB MK), Perdana Petroleum (PETR MK), Icon Offshore and Jasa Merin have all bagged Petronas term contracts mostly for Anchor Handling Tug and Supply (AHTS) vessels ranging from 5,150 bhp to 10,800 bhp, fixed at healthy day-rates of US$10,000-20,000 per day.

Tender for Pan Malaysian HUC project kick-started.

According to news reports, hook-up and commissioning specialist Dayang Enterprise (DEHB MK) is on track to win a portion of the RM7b-10b Pan Malaysian Hook-Up and Commissioning (HUC) project.

As a result, Dayang Enterprise has been increasing its stake in vessel owner Perdana Petroleum in anticipation of about 30 OSVs required for the project. We see Nam Cheong as a potential beneficiary due to its long-standing relationship with Perdana, with the latter likely to expand its fleet in view of the contract award. 

25 OSVs to be delivered in 2014.

Nam Cheong is scheduled to deliver 25 build-to-stock vessels in 2014, worth a total of US$520m. Vessel deliveries (US$520m) in 2014 will also be 33% higher than in 2013 (US$390m). We see Nam Cheong as a key beneficiary of a recent pickup in Malaysian offshore activity, being the largest Malaysian OSV shipyard with about 50-75% domestic market share.