Nam Cheong's Q3 profit staggers back nearly 100% to RM6,000

No new vessels have been sold since March.

Nam Cheong reported that net profit amounted to a measly RM6,000, reflecting a nosedive of nearly 100% in Q3, according to OCBC. It’s a steep fall compared to 3Q14 and 2Q15 net profit which stood at RM126.3m and RM10.7m, respectively.

This brings September net profit to RM50m.

"As in 2Q15, there were no vessel sales; YTD there had only been two sales in Mar worth RM212m. The group still has eight unsold vessels for this year under its shipbuilding programme, of which five are PSVs, two are AHTS vessels and the remaining one an accommodation work barge," asserts OCBC. Aside from these eight vessels, there are 7 vessels sold earlier and scheduled for delivery by the end of 2015.

As the offshore market remains still, however, delivery deferments for the 15 vessels is likely.

“Though Nam Cheong’s share price has corrected ~50% since our downgrade to Sell in mid-May, and is now below our earlier fair value estimate of S$0.17, we think there could be more downside ahead due to lacklustre earnings and weak outlook that would affect vessel values,” notes OCBC.