Workboat disposal favourable to Keyfield

PETALING JAYA: The move by Keyfield International Bhd to dispose of its six-year old dynamic positioning two accommodation workboat (DP2 AWB), Keyfield Compassion (CPS), is a favourable one as it shows strong demand for its AWB vessels despite weakness in upstream demand, says Kenanga Research.

It said this move allows the group to free up capital for its newbuild AWB and provides working capital options to work through the current slowdown in upstream demand.

“On assumptions of RM100,000 per day and a 30% net margin, the vessel could have yielded RM7mil post-tax profit, but this opportunity income loss can be largely offset by interest income of RM5mil that can be generated from the proceeds,” the research house added.

The company, which is involved in the vessel chartering business, in a statement on Monday said it had sold CPS to Petro Laut Sdn Bhd (PLSB) for RM151.9mil.

Looking ahead, the brokerage said the outlook remains cautious amid the ongoing impasse between Petroliam Nasional Bhd and Petroleum Sarawak Bhd or Petros and overall softer demand for offshore support vessels.

It said Keyfield’s strategic move to diversify its geographical exposure to the Middle East should help lift overall vessel utilisation, given the absence of seasonal monsoon disruptions, although day rates in this region are typically lower than in Malaysia.

The brokerage is maintaining Keyfield’s forecasts with a target price of RM1.57 and a “market perform” call.