KEYFIELD has announced eight more work orders secured from Petronas Carigali involving six accommodation work boats (AWB) and two anchor handling tug & supply (AHTS) vessels. This is its 4th award for AHTS since it was approved by Petronas as panel contractor in April 2024. The charter involves four in-house vessels and four third-party vessels, and the win is deemed in line with our assumptions. We maintain our earnings forecasts, TP of RM3.18 and OUTPERFORM call as the 20% dip in its share price from a recent peak presents accumulation opportunity as this job orders cement 28% of contract wins for the year.

KEYFIELD has accepted eight work order awards from Petronas Carigali (between June and August 2024) for the provision of six AWBs and two AHTS vessels under the Panel Contractor Contract (PCC) for offshore support vessel (OSV) Services, dated 9th April 2024. The work orders are scheduled to be executed in 2HFY24 and are valued at approximately RM130.3m, with durations ranging from 91 to 153 days per vessel.

The implied daily revenue per vessel (inclusive of daily charter rate (DCR), catering, and other auxiliary services) amounts to RM100,000- 110,000 for the AWBs, as five of these vessels are 4-point mooring vessels, typically at a discount compared to DP2 vessels. The only DP2 AWB will generate an estimated RM160,000 in revenue. The work orders will utilise four of KEYFIELD’s own vessels and two chartered vessels. The two AHTS vessels will also be chartered, with DCRs ranging between RM50,000 - RM55,000. Blended, the above is in line with our expectations, as we have assumed RM129,000 DCR for FY24 for AWBs and 10 third-party vessels to be chartered.

Outlook. KEYFIELD is currently in the peak season of the OSV market (typically 2Q and 3Q of the year), and we expect vessel utilisation to remain strong going into 3QFY24. The group took delivery of Keyfield Itqan (formerly known as Belait Barakah), a 239-pax accommodation work barge, on 3rd July 2024, and the vessel is currently being prepared for deployment. Keyfield Aulia (a second-hand AHTS vessel) was also added to the company’s fleet after being delivered on 13 August 2024. These vessels are expected to start contributing from 4QFY24 onwards, further driving earnings growth. Overall, we maintain that DCRs will continue to trend upwards in the local OSV market, as supply remains tight while client demand continues to increase.

Forecasts. Maintained.

Valuations. We maintain our TP of RM3.18 pegged to unchanged 11x FY25F PER, which is at a slight premium to 10.2x median OSV multiple due to its younger fleet and higher fleet specifications.

Investment case. We like KEYFIELD due to: (i) its exposure to the booming local OSV industry, (ii) its relatively young fleet age of eight years and DP2-rated vessels which are preferred by clients, and (iii) its inclusion as a panel contractor for AHTS for Petronas which could open doors for more third party AHTS charters. Maintain OUTPERFORM.

Source: Kenanga Research - 26 Sep 2024