“With non-discretionary demand driven by safety, regulatory compliance, and asset longevity, BKM enjoys resilient margins and strong pricing power, supported by global industry demand where corrosion costs the maritime sector US$50-80 billion annually,” states both Tang and Mo.
According to the UOB KayHian team, they highlighted that of the roughly 180 floating production, storage, and offloading (FPSO) units in operation globally, over half are more than 30 years old and a quarter exceed 40 years.
“For these ageing vessels, demand for inspection, repair, and corrosion prevention remains strong as high costs and long newbuild backlogs limit replacements, supporting BKM’s services as operators extend asset life,” the team adds.
Both analysts mention that BKM is shifting towards an asset-light, service-led model under its BKM 2.0 strategy, which focus on higher-margin, recurring services.
See also: Maybank re-initiates ‘buy’ on HRnetGroup with TP of 87 cents
“As part of this strategy, the proposed acquisition of the remaining 49% of Asian Sealand Offshore and Marine (ASOM) for $60 million, expected by end of June, will fully consolidate its high-margin earnings and align management interests with BKM,” the team predicts.
Both Tang and Mo expect material earnings accretion where BKM’s earnings could jump fourfold to $20 million in a bull-case scenario in FY2027 vs $5 million in FY2025.
As such, the UOB KayHian team is initiating coverage on BKM with a “buy” call and target price of 64 cents, based on 12.1 times FY2027 P/E ratio, which is 1.5 times standard deviation above its five-year historical P/E ratio.
See also: UOBKH maintains ‘buy’ on Reclaims Global following better than expected FY2026 results
“BKM currently trades at 9.0 times FY2027 P/E ratio. This represents a discount to peers' average FY2027 P/E ratio of 14.6 times, highlighting BKM’s undervaluation despite its market leadership,” both Tang and Mo conclude.
As at 4.45pm, shares in BKM are trading 1 cent lower, or 2.08% down at 47 cents. The counter touched an intraday high of 50.5 cents during today’s trading session.
