AmInvest Research Reports
Keyfield International - DCR Momentum Remains Steady
AmInvest
Publish date: Thu, 26 Sep 2024, 09:48 AM
AmInvest
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All materials published here are prepared by AmInvest. For latest offers on AmInvest trading products and news, please refer to: https://www.aminvest.com/eng/Pages/home.aspx
Tel: +603 2036 1800 / +603 2032 2888
Fax: +603 2031 5210
Email: enquiries@aminvest.com
Office Hours
Monday to Thursday: 8:45am – 5:45pm
Friday: 8:45am – 5:00pm
(GMT +08:00 Malaysia)
- We maintain our BUY call on Keyfield International (Keyfield) with a fair value of RM3.25 per share, pegged to a FY25F P/E of 11x - broadly at par to local offshore support vessel (OSV) peers of 10.5x. Our FV implies a neutral 3-Star ESG rating based on our in-house methodology.
- The group announced that it had received 8 work orders from Petronas Carigali (PCSB) between the months of June to August for the charter of 6 accommodation work boats (AWB) and 2 anchor handling tug and supply vessels (AHTS) for a total value of RM130.3mil.
- The duration of the awards is between 91 days to 153 days from the date of on-hire certificate.
- For purpose of the charter, the group is utilising the following vessels at the corresponding revenue per day [includes daily charter rate (DCR), catering, internet and other ancillary income]:
- 1 own DP2 AWB at RM150-RM160k.
- 3 own and 2 third party non-DP2 AWB at RM100- RM110k; and
- 2 third-party AHTS at RM50-RM55k.
- We gather from management that these are replacement contracts for its prior short-term awards under the Panel Contractor Contract for OSV Services for Petroleum Arrangement Contractors (PACs).
- Nevertheless, we view these wins positively as this is indicative of a continually steady trend in DCR rates. In our engagements, market participants have expressed concerns over sustainability of DCR rates in the near term given its considerable growth over the past 2-years.
- We note that the DCR rates assigned are largely within expectations and consistent with the group's contract wins YTD (exhibit 1). Recall that our full-year forecasts are premised on blended DCR rate of RM89k to RM95k for own vessels, partly skewed by longer term charters which have been locked in at lower rates since start of the year.
- As such, we maintain our view that the subsector is likely to see DCR levels remain steady over the next 3 years on the back of a tight supply market environment.
- We see Keyfield as the prime proxy to the OSV sector with a favourable vessel mix of AWBs and AHTS. Though the group's share price has seen a significant run-up of 156% YTD, we believe there is further upside as it currently trades at a 1-year forward PE of 7.9x, which translates to a compelling 25% discount to peer average. OIL & GAS KEYFIELD INTERNATIONAL (KEYFIELD MK EQUITY, KEYF.KL) 26 Sep 2024 DCR momentum remains steady Company Report BUY Muhammad Nuur Ashman Ab Razak muhammad-nuur- ashman.a@ambankgroup.com 0199965475 (Maintained) Rationale for report: Company Update
Source: AmInvest Research - 26 Sep 2024
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