Secondary market deals point to Keyfield upside

PETALING JAYA: Keyfield International Bhd’s offshore support vessel (OSV) fleet could be worth significantly more than the value reflected in the company’s books, based on recent transactions in the secondary market, according to Kenanga Research.

The research house estimated the realisable value of Keyfield’s fleet at approximately RM1.4bil, compared with its property, plant and equipment (PPE) value of RM962mil, including RM100mil for the acquisition of a new dredger.

At last look, Keyfield was trading at RM1.31, down 22 sen or 14.4% year-to-date, giving it a market capitalisation of RM1.06bil.

“Therefore, we believe that the market is mispricing the company by 29.2% based on its fleet’s realisable value alone.

“This is a very conservative measurement, given that it could approximate the potential liquidation value of the company,” Kenanga Research said in a recent report.

“We believe this is unjustified as the secondary market has been active in recent years, indicating strong demand for OSVs – even for ageing ones.”

Kenanga Research said its RM1.4bil estimate was based on recent transactions in the secondary market for OSVs, although differences in vessel age meant the estimates might not be fully accurate.

“If we were to just look at the company’s price-to-book valuation for FY26 at 1.4 times, the company might appear to be at the pricier end versus its peers that are trading at below-book valuations,” the research house said.

However, Kenanga Research took a market-based approach by assessing the fleet against estimated realisable market values rather than relying solely on the company’s book value.

The research house said Keyfield’s ability to acquire most of its vessels during distressed market conditions between 2021 and 2023 had also provided the group with a margin of safety.

Based on its FY26 earnings forecast of RM72mil, which it considers to represent downcycle earnings, Kenanga Research estimated that the group would take about 12 years to break even on the PPE value of its fleet.

“Given Keyfield’s strong cash flow, we believe that its market value trading below potential liquidation value is unreasonable, especially given that its earnings may be bottoming in financial year 2026 (FY26),” it said.

Looking ahead, Kenanga Research expects the company’s vessel utilisation to improve in the second half of 2026 (2H26) as client scheduling requirements pick up.

It noted that 52.6% of Keyfield’s vessels had been in transition between charters in 1H26, weighing on utilisation.

“Based on the charters announced, we believe that the utilisation will be higher year-on-year in the third quarter (3Q) and 4Q this year, particularly in the last quarter due to the anticipated pick-up in demand based on contract pipelines, versus the low charter demand in 4Q25,” the research house said.

Kenanga Research has maintained an “outperform” call on Keyfield, with an unchanged target price of RM1.88, pegged to an unchanged 11 times FY27 forecast price-earnings ratio.

The research house added that its target price did not include potential upside from Keyfield’s newbuilds scheduled for delivery in 2028, comprising one accommodation work barge and two anchor handling tug supply vessels.

It has also assumed only one quarter of contribution from the group’s dredger in FY27.