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Nam Choeng doubles profit in robust Asia Pacific offshore support market

11th November 2014

Nam Cheong Limited has reported an 81 per cent rise in revenue to around USD 185m (RM 618.6m) for the three months ended September 30, 2014, from around USD 102m (RM 341.2) in the corresponding period last year

Nam Choeng doubles profit in robust Asia Pacific offshore support market
'We operate in the highly resilient shallow water segment which we deem as recession- proof due to the lower cost of oil production' - Nam Cheong chief executive officer

The robust top line performance boosted 3Q 2014’s net profit by 112 per cent to a record USD 37.5m (RM 125.6m) from USD 17.7m (RM 59.2m) in 3Q 2013.

“We achieved outstanding financial results during 3Q 2014 which signifies our strongest quarter since Nam Cheong’s listing on the SGX,” said Datuk Tiong Su Kouk, Nam Cheong executive chairman.

“The momentum of our order wins remains robust, with Nam Cheong securing a record order of 25 vessels worth approximately USD 505m on a year-to-date basis.

“Further, we also secured letters of intent worth USD 186m for our proprietary designed diesel-electric powered anchor handling tug supply vessels which we launched in October, despite volatile oil prices and challenging conditions in the wider market. This is a testament to our customers’ faith in the group and represents the strength of Nam Cheong’s position in the industry’s value chain.

“Along with our record quarter, we also set several significant milestones along the way.

“We are in a position of strength and are excited by the recent corporate developments that have taken place such as our partnership with Marco Polo Marine Limited to form a joint venture and a proposed investment in their indirect subsidiary in Indonesia during the quarter which we believe will strengthen our position in the cabotage-protected Indonesian market.

“With these strategies established, we are well-placed in our pursuit in being a global player in the offshore and marine industry and our goal in being the largest OSV provider in the world by 2017.”

Global oil prices have recently seen volatility mainly due to a glut in oil supplies and weak economic growth while global oil demand is still expected to rise by 700,000 barrels per day (bpd) to 92.4 million bpd in 2014 according to the International Energy Agency.

“Nam Cheong is seasoned in weathering both downturns and buoyant periods in the offshore and marine industry evidenced by our long operating history,” said Leong Seng Keat, Nam Cheong Group chief executive officer.

“Moreover, we operate in the highly resilient shallow water segment which we deem as recession- proof due to the lower cost of oil production compared to the deepwater segment.

“Backed by our order book for OSVs worth approximately RM 1.9bn [USD 568m] as at September 30, 2014 which are due for deliveries up till calendar year 2016, we continue to be optimistic on Nam Cheong’s long-term growth prospects.

“Further we see growing demand for modern OSVs, especially those which are equipped with fuel efficient features. By optimising our vessels for fuel efficiency, we help put our customers in a better position to win jobs, particularly in periods of low oil prices when the oil majors are likely to face margin squeeze. During these periods, the oil majors are more incentivised to utilise vessels with higher fuel efficiencies in order to reduce expenses. The importance of these factors is clearly signified by the 100 per cent take up rate of our proprietary designed diesel-electric powered anchor handling tug supply vessels launched recently.”

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