We maintain BUY on Keyfield. The Group announced purchase of a platform supply vessel (PSV), in line with our fleet expansion thesis. Though our sensitivity analysis presents a +7% to our FY25F core net profit (CNP), we maintain our forecasts for now pending acquisition of a charter contract for the vessel. With sufficient headroom for funding, we believe Keyfield is still in pole position for further fleet expansion initiatives in the near term. Our target price (TP) of RM3.25/share is based on CY26 PE of 10x, at par to the local OGSE average. The Group currently trades at a compelling 1-yr forward PE of 7.4x.

• First purchase for the year in PSV space. Keyfield announced that it is acquiring a ~5-year-old China-flagged PSV with a dynamic positioning 2 (DP2) mooring system for a purchase consideration of US$17.6mil (RM79.2mil) (name: Keyfield Gratitude, Exhibit 2). Additionally, the group will also incur costs amounting to US$2.2mil (RM9.0mil) for the purpose of inspection, dry docking, delivery expenses and conversion of the vessel into Malaysian-flagged upon completion of the purchase. The vessel has an accommodation capacity of 59 passengers, including crew members. Delivery is expected in February, whilst the latter process is expected to be completed by June at the latest.
• Positive on acquisition, expect bumper growth potential for FY25F at fair price. We are positive on the acquisition as the PSV space is lucrative with tight supply. According to our checks, there are only 10 PSV vessels in Malaysia as at end-Dec 2023. We believe the situation remains the same as no other acquisitions or newbuilds within this category has been announced by other local charterers or shipbuilders. Assuming revenue per day of RM100k and a utilisation rate of 65% (240 days), we believe this will provide a 7% bump to our FY25F CNP, bringing growth for the year to +16% - a significant premium to the KL ENERGY index's flat growth expectations. Nevertheless, we maintain our forecasts for now until the group successfully acquires a charter contract for the vessel. We think the purchase price is fair given its relatively young age as similar purchases globally in the past 2 years has been within the region of US$15- 25mil in our observation. For reference, the cut-off age for PSVs are similar to anchor handling tug & supply vessels (AHTS) at 20 years.
• Sufficient headroom for further expansion later. The acquisition price is expected to be satisfied by the Group's recent RM200mil sukuk issuance. Given the choice of vessel and price, we believe the acquisition is reflective of management's prudent capital allocation approach. With a remaining RM120.8mil, we believe Keyfield is in prime position for another vessel acquisition later this year.

Source: AmInvest Research - 7 Jan 2025