KEYFIELD has secured two new vessel charters, namely one AHTS and one AWB DP2 charter for a cumulative value of RM59.6m. The specific vessels involved were not named but we believe that the daily charter rate (DCR) will be at least RM150,000 for the AWB and RM40,000 for the AHTS. The win is a positive but deemed within our expectations. We maintain our earnings forecasts, TP of RM3.18 and OUTPERFORM call.

KEYFIELD has secured two new vessel charters, comprising one AHTS and one DP2 AWB, with a total contract value of RM59.6m for the firm charter period. The AHTS charter will commence in April 2025 for a firm 720-day period with an option to extend for 180 days, serving in the United Arab Emirates. Meanwhile, the DP2 AWB charter will begin in February 2025, running for 150 days with a 120-day extension option, and will be deployed in Malaysia.

While the DCRs were not disclosed, we estimate the AWB to command at least RM150,000/day based on past contract announcements, while the AHTS DCR is expected at RM40,000/day, assuming it is a 60-tonne vessel. The win aligns with our expectations, as we have already factored in charters for these vessel types within KEYFIELD's fleet projections.

Outlook. The group took delivery of Keyfield Itqan (formerly known as Belait Barakah), a 152-pax accommodation work barge, on 3rd July 2024, and the vessel is currently being prepared for deployment.

Keyfield Aulia (a second-hand AHTS vessel) was also added to the company's fleet upon delivery on 13 August 2024. These vessels are expected to start contributing from 4QFY24 onwards, further driving earnings growth. Overall, we maintain that DCRs will continue to trend upwards in the local OSV market, as supply remains tight while client demand continues to increase.

Forecasts. Maintained.

Valuations. We maintain our TP of RM3.18 pegged to unchanged 11x FY25F PER, which is at a slight premium to 10.2x median OSV multiple due to its younger fleet and higher fleet specifications.

Investment case. We like KEYFIELD due to: (i) its exposure to the booming local OSV industry, (ii) its relatively young fleet age of eight years and DP2-rated vessels which are preferred by clients, and (iii) its inclusion as a panel contractor for AHTS for Petronas which could open doors for more third party AHTS charters. Maintain OUTPERFORM.

Risks to our call include: (i) significant decline in Brent crude prices, (ii) unexpected vessel downtime due to unplanned maintenance, and (iii) decline in oil producers' capex planned.

Source: Kenanga Research - 5 Feb 2025