Keyfield Gets An Upgrade After Latest Contract Win

Keyfield International (KEYFIELD) secured contracts worth RM40 million from Hess Malaysia for one accommodation work boat (AWB) and one anchor handling tug supply (AHTS) vessel, as announced by Kenanga Investment Bank (Kenanga) in their report today (July 5, Friday).

Kenanga upgraded their target price for KEYFIELD to RM3.00, up from RM2.85 previously, following the contract wins and higher-than-expected daily charter rates (DCR) for the AWB. They maintain an OUTPERFORM rating, citing improved FY24-25F net profit forecasts by 6% and 5% respectively, driven by these developments.

The awarded contracts commence in June and July 2024, with durations of five and six months for the AWB and AHTS respectively. Kenanga estimates an impressive DCR of up to RM200,000 for the AWB and up to USD1.9 per brake horsepower (bhp) for the AHTS, supporting their positive outlook on KEYFIELD’s earnings potential.

Looking ahead, Kenanga expects strong performance in the upcoming quarters as KEYFIELD’s fleet operates near full capacity post-monsoon season. With most AWBs engaged in medium-term charters and robust demand expected to sustain, the bank anticipates the potential for higher DCRs in FY25 amidst a tight supply of offshore support vessels (OSV) in Malaysia.

Kenanga’s valuation reflects a forward-looking approach, pegging KEYFIELD’s target price to an unchanged FY25F PER of 11x. They highlight the company’s advantages, including a relatively young fleet and strong financial position with low net gearing, positioning KEYFIELD favourably within the booming AWB subsector.

Investors are advised to consider KEYFIELD for its strategic market position, robust contract wins, and positive earnings outlook supported by favourable industry dynamics. Kenanga’s OUTPERFORM rating and upgraded target price underscore their confidence in KEYFIELD’s growth potential amidst current market conditions.

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