| Offshore support vessel (OSV) operator-owner Nam Cheong continues to gain traction among investors, as the stock hit $1.59 this week (+69% year-to-date and +225% in the past year). Its recent announcement of securing charter contracts worth up to RM102.5 million reinforces a view that the business is on steady footing with multi-year visibility of its revenue. The latest contracts, covering an anchor handling tug supply (AHTS) vessel and a maintenance workboat, have firm tenures of up to two years commencing in 2026, with options for an additional year. With that, Nam Cheong has nearly 70% of its 36-vessel fleet on long-term contracts. |
Following these wins, analysts from DBS and CGS International have maintained their bullish stances on the stock but did not up their target prices.
Let's check out why long-term charters matter to investors and the company and where Nam Cheong's valuation stands.
| The Investor's Perspective |
From an investment standpoint, the most crucial takeaway is that the proportion of Nam Cheong’s fleet secured under long-term charters rises to a significant 69%, up from 62% previously.
That brings positives such as:
- Enhanced Earnings Visibility: In the cyclical oil and gas industry, spot market day rates can be volatile. Locking in nearly 70% of the fleet on long-term contracts provides a highly predictable and stable recurring income base over the next few years.
- Improved Fleet Utilization: Long-term charters naturally keep vessels working rather than sitting idle, lifting Nam Cheong's fleet utilization rate to approximately 70% through FY26, up from around 64% to 65% in FY25.
- Downside Protection: The company is better shielded from short-term macroeconomic shocks or geopolitical volatility.
Furthermore, Malaysia’s cabotage policy continues to shield domestic players like Nam Cheong, inherently limiting the downside risk to charter rates.
| A Look at Forecast Financials |
Supported by this strong charter coverage and a tight supply of OSVs not just in the region but also globally, analysts project robust top-line and bottom-line growth.
 "We hosted NCL’s management for a group investor call on 31 Mar 2026 as part of our'Feeling the Fuel' series.... Management highlighted that offshore services vessel demand has not significantly changed in the past month despite the Middle East conflict as spending decisions by national oil companies typically have longer lead times." -- Meghana Kande (photo), CGS analyst |
DBS analyst Ho Pei Hwa, in her earlier 3 March 2026 note, is particularly optimistic about near-term revenue, projecting total revenue of RM 756.5 million in FY26F, climbing to RM 884.1 million in FY27F.
CGS International analysts Meghana Kande and Lim Siew Kee forecast: RM 655.7 million for FY26F and RM 867.3 million in FY27F.
The analysts are highly aligned on Nam Cheong's core profitability, forecasting EBITDA to comfortably surpass RM 300 million in FY26F and grow toward the RM 340-350 million mark by FY27F.
Despite the strong projected growth, Nam Cheong's valuation remains relatively undemanding compared to its industry peers.
|
→ See also:From Suspension to Super-Rally: This Stock Attracts a Third Analyst's Coverage
