Maybank Investment Bank’s (Maybank IB) environmental, social, and corporate governance (ESG) assessment of Icon Offshore Bhd (Icon), showed that it has an above average rating, but it still has some room of improvement.
“Our assessment of Icon’s overall ESG score, under our proprietary ESG scoring methodology, is 56 (out of 100), making its ESG rating above average, in our view.
“We think that Icon has decent disclosures, and the right focus and policies toward its ESG goals, it said in its research note today (Jan 26).
Maybank IB said it strongly believed that Icon can improve in the following aspects scope 3 emission disclosure, greenhouse gases (GHG) intensity, energy consumption and intensity and share of renewable energy used.
“However, we highlight that Icon has shown decent improvement over the years in total waste generated, percentage of women in workforce and senior management and training hours per employee,” it said.
Icon follows the Task Force on Climate-Related Financial Disclosures (TCFD) framework for ESG reporting. Also, it adheres and supports the Global Compact (UNGC) goals and initiatives.
The research house said there are also proper ESG policies in place – led and guided by its Audit and Risk Management Committee that is directly under the supervision of its Board of Directors.
“Also, Icon has pledged its Net Zero Carbon Emission target by 2050 and has achieved zero hazardous spills in FY22,” it added.
The research house said Icon is still its sector’s top BUY, and maintained the call on the group.
The BUY call is premised on a few key assumptions, a blended average daily charter rate (DCR) of RM38,500, 45,000 and 53,500 for FY23 to FY25E, a flattish 83 to 85% utilisation rates; and FY24-25E EBITDA margins of 45 to 48% – all of which are highly dependent on the renewal of contracts for 11 of its offshore support vessels (OSVs) beginning 3Q24.
“With that, we project a net profit growth of more than five time in FY24E and a further 83% in FY25E, implying a monumental 2-year compound annual growth rate (CAGR) of 204%,” it said.
Consequently, Maybank IB stayed the target price (TP) of RM1.19 pegged to 12x FY25E price-earnings ration (PER) – in line with oil and gas services and equipment (OGSE) peers.
