As the consolidation of ASOM to be a wholly-owned subsidiary of Beng Kuang by end-june 2026, Tang and Mo expect the earnings from the two contracts would be fully captured by Beng Kuang, with stronger revenue visibility for FY2026-2027.
They also believe that the successful execution of these initial tank service works could position ASOM favourably for subsequent phases of the FPSO life extension programmes, providing potential opportunities for additional contract awards over the coming years.
Tang and Mo add that the firm’s management expects additional contract awards in this quarter. The company is currently executing five FPSO projects in Guyana, with a potential four more FPSO projects in Central America.
Reflecting management’s confidence, the company is increasing deployed FPSO headcount from around 30 currently to approximately 120 between June and September so as to support anticipated ramp-up in operations. Beng Kuang also plans to deploy a floatel by September to support its FPSO operations in Angola.
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Another reason for UOBKH’s confidence is institutional investment in the company — Beng Kuang’s founder divested part of his stake to multiple investors including Amova Asset Management and Tokio Marine Life Insurance Singapore. At the same time, management increased their holdings, a move which UOBKH views positively as it strengthens alignment between management and investors.
Moreover, Beng Kuang has been focused on paying down its debt. With a net cash position of $26.9 million and minimal debt, the company’s balance sheet is likely to strengthen even more as it shifts towards an asset-light operation model under its BKM 2.0 strategy, positioning the company well to capitalise on any opportunities amid strong industry tailwinds.
UOBKH maintain their “buy” rating at an unchanged target price of 75 cents, implying a 53.1% upside. This valuation is 14 times 2027 forward P/E which is 1.5 standard deviations above the historical average. As Beng Kuang is currently trading at around 9.2 times P/E now, the counter is trading at a discount, according to UOBKH.
“Beng Kuang’s strong fundamentals, underpinned by a superior ROE of 38.8% versus the industry average of 17.3% and a strong net cash position, continue to support the case for valuation re-rating,” states UOBKH.
Shares in Beng Kuang closed at 50 cents on June 17, up one cent or 2%.
