Sealink International Bhd has been inching higher from its 30 sen low. Over a year, Sealink has doubled its share price. The odds are in favour of the bulls with an upward bias in the coming days.

Sealink, which builds and operates offshore support vessels (OSV), is anticipated to return to the black this year, driven by higher utilisation and charter rates. The blended fleet utilisation will likely rise to over 68% this year, from about 60% in 2023.

This is to be driven by the robust offshore maintenance activities amid an “acute” shortage of vessels. Daily charter rates, or DCR, have also improved tremendously.

Sealink may record a core net profit of RM22.5 million in 2024, signifying a major comeback after nine consecutive years of net losses. It saw a turnaround in the first quarter of its financial year 2024 on the back of higher crude oil prices.

The Sarawak-based Sealink owns 19 active OSVs mainly chartered to the oil and gas industry. The company also has a shipyard in Miri, which has built 68 vessels since 1999.

Sealink is also aiming to secure a few vessels to be chartered under Petronas’ upcoming production operations vessels (POVs) programme. Sealink still has three currently inactive vessels and is awaiting spare parts for dry-docking, which are slated to be completed by December this year.

The return of the vessels to service could provide further utilisation upside in 2025. All in all, Sealink is expected to report a core net profit of RM29.5 million for the next year.

In terms of valuations, Sealink is currently trading at about seven times the projected earnings for 2024, and HLIB values the stock at 52 sen, based on 10 times 2025 earnings per share.

Investors should favour Sealink as it is seen as a laggard in the OSV space, due to its undemanding valuation amid an imminent earnings upcycle.