Nam Cheong's 19% growth margin beats Singapore peers

3-year average of competitors is 9%.

According to CIMB, Malaysia’s Petronas has budgeted RM300bn (US$100bn) in E&P spend over 2012-17, up 70% from the previous five years, to arrest a production decline and boost reserves.

Initiatives such as marginal and deepwater field developments as well as enhanced oil recovery mean more  work for the Malaysian OSV sector.

Here's more from CIMB:

Given the improving OSV market, Nam Cheong has launched its most ambitious newbuild programme to date, which should propel earnings growth. 

By turnover, Nam Cheong is Malaysia’s largest offshore support vessel (OSV) builder. The group has over 20 years of track record in building OSVs and has delivered over 80 vessels since 2007.

Using Chinese yards to support its build-to-stock business model, Nam Cheong has achieved a 3-year average gross margin of 19% vs. Singapore peers’ 9%.

In terms of ROE, it achieved a 3-year average of 30% vs. Singapore peers’ 7%. Although build-to-stock is not unique to Nam Cheong in Malaysia, the company stands out with its close relationships with Malaysian OSV owners.