From an earlier 62%, Nam Cheong's proportion of long term charters has now reached 69%, which is just a shade lower than its target of 70%.
The other way to look at it is that 25 out of Nam Cheong's 36 vessels are on long term charter, with the remaining 9 vessels available to take advantage of potentially higher priced spot charters.
Ho is keeping her forecasts for now but sees potential for the stock to re-rate, given how the charter contracts are a "positive reinforcement" of buoyant offshore oil and gas activities in the region.
Nam Cheong now has two workboats idling and if these are taken up as well, that will be further upside.
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In addition, Nam Cheong has recently won contracts to build new vessels at its yard and similarly, if there are more such new contracts, that will be another reason to re-rate this stock, says Ho, whose target price of $1.60 is based on 10x FY2026 earnings.
Similarly, Meghana Kande and Lim Siew Khee of CGS International have in their April 7 note maintained their upbeat "add" call for the stock.
Citing the company's management, they note that offshore services vessel (OSV) demand has not significantly changed in the past month despite the Middle East conflict as spending decisions by national oil companies (NOCs) typically have longer lead times.
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"As such, 2026 capex and activity are largely fixed, with uplift from persistent higher oil prices and greater emphasis on energy security likely to be reflected from 2027. Increased offshore activity by oil majors is a key catalyst for OSV demand," state Kande and Lim, whose target price for this counter is $1.92, more bullish than DBS.
Furthermore, domestic players like Nam Cheong are shielded somewhat from Malaysia's cabotage policy in the event that vessels are redeployed from the Middle East to this region.
Also, Nam Cheong is not seeing any "material risk" to its recent US$64.5 million newbuild contract for a UAE-based customer, although enquiries from the Middle East have slowed.
The company, is, however, seeing increased interest for newbuilds from players in West Africa, Vietnam and Thailand. Kande and Lim's target price of $1.92 is based on 11 x FY2027 earnings, which is roughly in line with most peers.
Re-rating catalysts include higher-than-expected shipbuilding orders, increased capex by oil majors driving higher demand for offshore services, and fleet expansion.
On the other hand, downside risks include lower-than-expected fleet utilisation and higher costs impacting margins.
