KEYFIELD: Offshore Support Capacity Expands, Recommendation Upgraded
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading offshore support company is set to significantly expand its operational capabilities with a strategic new vessel order. This development is viewed positively by analysts, with TA Securities upgrading its recommendation to BUY, following recent share price weakness.
Strategic Fleet Expansion
The company’s wholly-owned subsidiary, Keyfield Resolute Sdn Bhd, has formally entered into a shipbuilding contract with Jiangsu Shunhong Marine Technology Co., Ltd. The agreement is for the construction of a new 90MT diesel-electric DP2 Anchor Handling Tug Supply (AHTS) vessel. Valued at USD18.0 million (approximately RM70.7 million based on current exchange rates), the vessel is anticipated for delivery between 2027 and 2028. Funding for this significant investment will be sourced through a combination of internal cash reserves and unutilised Sukuk proceeds, amounting to approximately RM45 million.
Management has indicated that the primary objective of this new vessel is to facilitate the Group’s expansion into lucrative international charter markets, with a particular focus on the Middle East region. While pursuing this international growth, the company will simultaneously uphold its strong market presence in accommodation workboats, a segment where it maintains a core strength.
Future Outlook and Financial Impact
Analysts view this vessel order as strategically beneficial, as it reinforces the company’s initiative to increase its exposure to higher-specification AHTS vessels. Such vessels are known to command stronger charter demand and higher day rates, contributing to enhanced revenue potential. The newbuild will augment the company’s existing AHTS capacity without disrupting current long-term charters, providing greater flexibility to pursue new tenders and spot opportunities.
Upon its delivery, the Group’s total fleet is projected to expand to 16 vessels, including the DP2 AWB currently under construction and excluding Keyfield Compassion. The new diesel-electric DP2 AHTS will mark the company’s third owned AHTS, aligning its fleet with rising client preferences for environmentally friendly and high-redundancy vessels, especially among international oil majors.
From a financial perspective, the contract is not expected to materially impact earnings for the financial year 2026, given the construction timeline. However, positive earnings contributions are anticipated from FY2027F-FY2028F onwards, once the vessel commences charter operations. The internally managed funding for the vessel ensures no adverse impact on share capital or gearing.
Analyst’s Recommendation
TA Securities maintains its target price at RM1.70 per share, based on 9.0x FY26F EPS. However, in light of recent share price weakness, the firm has upgraded its recommendation from HOLD to BUY, signaling an attractive entry point for investors.
