Keyfield International Bhd (Keyfield, 5321) is set to make its debut on Bursa Main Market today. Keyfield specialises in offshore accommodation, chartering of both its own- and third-party accommodation work boat (“AWB”), and providing related onboard services. Premised on its (i) fleet expansion via acquisition and organic new-builts; (ii) enhancement of own vessels’ capabilities to increase daily charter rates (“DCR”); we expect Keyfield to register core net earnings of RM113.4m and RM117.8m for FY24 and FY25, respectively. BUY with a FV of RM1.56 based on 11x over FY24 EPS, which aligns with Bursa Malaysia offshore support vessel operators valuations.

With a track record spanning 11 years, Keyfield has a fleet of 11 accommodation vessels, including 8 AWBs, 2 smaller accommodation vessels and a work barge or a total capacity of 2,134 passengers. Keyfields intends to further expand its fleet through (i) acquisition of completed vessels for immediate deployment, as exemplified by the acquisition of IMS Aman in Jan-24; (ii) building new accommodation vessels (iii) acquisition of a new Anchor Handling Tug & Supply (“AHTS”), all of which will positively enhance Keyfield’s prospects with its existing largest customer Petronas. While working on future vessel growth targets, Keyfield’s near-term growth will be bolstered by the addition of recently acquired brownfield vessel IMS Aman that commenced operations in mid-March 2024, adding approximately 10% of total capacity to the group.

Keyfield plans to continuously enhance the capabilities of its vessels via (i) installation of food composting systems to 3 of its vessels by FY24; (ii) installation of solar panels on its largest vessel Blooming Wisdom, in which the installation is slated to complete by 2QFY25; (iii) retrofit a DP2 system onto one of its AWBs by FY25, which will enhance the efficiency and safety of the vessel during rough weather. These initiatives underscore Keyfield’s position to negotiate higher DCR (daily charter rate) for new contracts, while also contributing to cost savings and solidifying its commitment to ESG sustainability initiatives.

Post-IPO, Keyfield’s gearing ratio is expected to hover at just 0.1x, which offers optionality and flexibility for further growth upside or distribution of dividend to shareholders. With average vessels’ age being at least one-fifth younger than industry’s average and outstanding order book of RM662.6m (1.5x FY23 revenue) as at end Feb-24. Based on our estimates, we deem Keyfield’s IPO valuation of FY24 PER at 6.3x as a major bargain.

Source: Rakuten Research - 22 Apr 2024

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