Keyfield International Bhd’s first-half FY2026 (1HFY26) core loss came in below expectations as weaker vessel utilisation, particularly among accommodation work barges (AWBs), continued to weigh on its offshore support vessel (OSV) operations.
Kenanga Research said Keyfield posted a core loss of RM4.1 million for 1HFY26, excluding an exceptional gain of RM82.7 million from the disposal of the vessel Compassion.
The result was below Kenanga’s full-year core earnings expectation of a RM84.5 million profit and the consensus forecast of RM108 million.
The company declared an interim dividend of 1.5 sen per share, bringing its 1HFY26 dividend to 2.5 sen, slightly below Kenanga’s full-year expectation of 5.6 sen.
Vessel utilisation remains key drag
On a year-on-year basis, Keyfield’s 1HFY26 revenue plunged 27%, as average vessel utilisation declined to 69% from 75% a year earlier.
Kenanga attributed the weaker performance mainly to softer hiring activity, particularly for AWB vessels, although stronger activity involving anchor handling tug supply (AHTS) vessels provided some offset.
The lower utilisation also pushed the group into a core loss from a profit a year earlier.
This was compounded by higher cost of sales, as costs associated with unchartered vessels are borne by Keyfield rather than its clients.
Sequentially, however, the group showed a significant recovery.
Revenue surged 141% quarter-on-quarter, while vessel utilisation recovered to 69% from just 36% in the previous quarter. Kenanga attributed the improvement to the seasonal pick-up in offshore activities following the end of the monsoon season.
As a result, Keyfield returned to a core profit in 2QFY26 after recording a loss in the preceding quarter.
Middle East operations remain supported
Kenanga said Keyfield’s vessels deployed in the Middle East continue to receive charter income from clients.
The company is expected to have five vessels deployed in the region, comprising two owned AHTS vessels on charter, one third-party AHTS vessel, one owned AWB and one power cable vessel.
Any additional operating expenses for these vessels are currently borne by clients unless the relevant contracts are affected by a force majeure event, providing some protection to Keyfield’s earnings.
However, Kenanga remains cautious on the broader FY2026 outlook as upstream OSV activity remains weak.
Oil producers typically take around six to 12 months to respond to changes in crude oil prices, meaning the current weakness in offshore demand could persist despite changes in the oil-price environment.
Kenanga now expects the group’s earnings recovery to begin in FY2027, when oil producers are likely to increase upstream spending amid a greater focus on energy security.
The research house, however, expects the recovery to be less pronounced than previously anticipated.
Newbuilds provide longer-term upside
Looking further ahead, Kenanga sees additional earnings potential in FY2028 from Keyfield’s vessel expansion programme.
The company has two AHTS vessels and one DP2-enabled AWB newbuild in its fleet pipeline, which could allow the group to capture stronger demand should an OSV upcycle materialise.
Kenanga said the newbuilds provide a potential avenue for Keyfield to expand its earnings base once offshore activity strengthens.
Earnings forecasts cut, target price lowered to RM1.80
Following the weaker-than-expected vessel utilisation, Kenanga cut its FY2026 and FY2027 earnings forecasts by 15% and 10%, respectively.
The research house lowered its average utilisation assumption to 66% from 71%, reflecting continued weakness in AWB demand amid subdued upstream maintenance activity.
As a result, Kenanga reduced its target price for Keyfield by 10% to RM1.80 from RM2.00, based on an unchanged 11 times FY2027 price-to-earnings ratio, which it said was consistent with an early-upcycle valuation multiple for upstream service providers.
Despite the earnings downgrade, Kenanga retained its Outperform recommendation.
The research house said it remains positive on Keyfield given its track record in OSV vessel trading, which has generated sizeable disposal gains in recent years, its ability to maintain dividend payouts above 40% potentially supporting a higher-than-expected dividend yield, and its positioning as a potential beneficiary of an OSV upcycle in FY2027-28.
