She also believes that Nam Cheong, which has been paring debt, has strengthened its balance sheet with forecasted net debt to equity dropping from 0.4 times in 2025 to 0.1 times in 2026. This “raises dividend resumption odds to 20-30% payout”, estimated to be 2.6-3.0 cents, or a 2.5-3.5% yield.
To recall, Nam Cheong operates the youngest OSV fleet in Malaysia. With 38 vessels at an average age of eight years, Ho believes that Nam Cheong possesses a competitive advantage as its peers operate fleets between 13 to 15 years old.
A major customer is Malaysia’s national oil company Petronas which Nam Cheong has signed a RM1.22 billion chartering contract with. This provides strong earnings visibility that is also supported by the pivot to long-term charters for around 60-70% of its fleet. Ho also notes that Nam Cheong is diversifying into new geographic markets including the Middle East and Japan, and developing new product offerings such as green offshore solutions.
After “weaker” y-o-y fleet utilisation in 1H2025 attributed to vessel downtime for preparations related to long-term charters, Ho expects fleet utilisation to rebound and “normalise” to around 70% in in 2H2025 and 2026 from 60%. She believes the normalisation and relatively stable charter rates amid tight supply to drive sequential revenue growth of 18% from 1H2025 to 2H2025 and around 12% y-o-y for 2026.
See also: Beansprout initiates coverage on CSE Global at ‘buy’ with target price of $1.40
DBS describes Nam Cheong as a “hidden gem” and a “potential multi-bagger” that has room for growth. Trading at approximately six times of FY2026 forecasted P/E, this represents an “unwarranted” and “steep” discount of 20-50% to peers. These include Marco Polo Marine trading at 16 times P/E, Pacific Radiance at 10 times, ASL Marine at nine times and Malaysia-based Lianson at 22 times.
For Ho, Nam Cheong's fair value is $1.60 at ten times FY2026 P/E. This valuation does not account for the potential of earning newbuild orders.
Nam Cheong recently sold a second vessel in a month. CEO Leong Seng Keat says that the company has the option to either earn recurring income through monetisation of older vessels via ship sales or generate revenue from chartering.
Shares in Nam Cheong are down one cent, or 0.8%, at $1.18 at around 3:20 pm on Jan 30. The counter is up 25% ytd.
