One O&M company that has caught the attention of analysts is Nam Cheong, whose share price has risen from less than 20 cents in 1Q2024 to above $1.20 as of Feb 3.
Following improved performance since 2024, DBS Research Group initiated coverage of Nam Cheong in November 2025 with a “buy” call and a target price of $1.25. The buy call was reiterated on Jan 29 with a higher target price of $1.60.
Similarly, CGS International (CGSI) initiated coverage of Nam Cheong on Jan 30, rating the stock an “add” and setting an even more bullish target price of $1.87, representing an upside of 68 cents or 57% from its end-January closing price of $1.19.
To recap, Nam Cheong reported earnings of RM790.1 million ($251.9 million) in FY2024 ended Dec 31, 2024, more than quadruple its profit of RM157.3 million in FY2023. For its most recent nine-month period ended Sept 31, 2025, the company reported earnings of RM133.7, a 80% y-o-y drop.
DBS and CGSI cite three main reasons for their confidence in Nam Cheong: opportunities in the newbuild replacement cycle, stronger fleet utilisation and expansion, and balance sheet flexibility.
Describing Nam Cheong as an “undervalued gem”, DBS analyst Ho Pei Hwa suggests that there is more room for Nam Cheong’s earnings to grow, noting that a “buoyant” offshore support vessel (OSV) secondhand market is signalling newbuild tailwinds and rising demand, with the company presumably in position to generate earnings from RM30 million ($9.64 million) to RM200 million of newbuild orders.
Agreeing with DBS, CGSI’s Meghana Kande and Lim Siew Khee say Nam Cheong is well-positioned to seize newbuild OSV opportunities as global OSV fleets age, incur higher maintenance costs, and become less efficient. They point out that Nam Cheong handled peak order books of more than RM1 billion from FY2012 to FY2015, and that management has hinted that the company is in active discussions for newbuild orders.
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Nam Cheong has also signed a chartering contract valued at RM1.22 billion with Petronas. This provides strong earnings visibility, supported by the pivot to long-term charters for 60% to 70% of its fleet. DBS’s 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.
Similar to DBS, CGSI analysts also expect Nam Cheong’s OSV fleet to achieve higher utilisation rates over the next two years. They are also optimistic that the six vessels under construction could contribute 5% to 7% to revenue growth, or around RM75 million annually.
To recap, Nam Cheong operates the youngest OSV fleet in Malaysia. With 38 vessels at an average age of eight years, DBS believes Nam Cheong has a competitive advantage, as its peers operate fleets that are 13 to 15 years old.
Lastly, DBS believes that Nam Cheong’s strengthening balance sheet “raises dividend resumption odds to 20%–30% payout”, estimated to be between 2.6 cents and 3.0 cents, translating into a yield of between 2.5% and 3.5%.
Meanwhile, CGSI expects that, with lower financing costs and liquidity unlocked by the sale of older vessels, Nam Cheong will have the flexibility to fund growth initiatives and potentially resume dividends.
For DBS, Nam Cheong should be valued at $1.60 or 10 times FY2026 P/E. This valuation does not account for the potential of earning newbuild orders. CGSI is slightly more optimistic. Their valuation of $1.87 is based on a forecast FY2027 P/E of 11 times, in line with its peers. Nam Cheong closed at $1.30 on Feb 4, up three cents or 2.4% from the previous day’s close.
