2024 Q3 P/L Challenge
The offshore supply vessel (OSV) sector is enjoying a multi-year boom after a painful slump market.
OSVs are specialized ships designed to supply offshore oil and gas platforms with essential goods, personnel, and equipment.
They play a vital role in maintaining offshore operations.
- $Atlantic Nav (5UL.SG)$: Its performance has been a stunning ~1170% in the same period (from 2.8 cents to 35.5 cents).
- $NamCheong (1MZ.SG)$: Coming out of a 4-year trading suspension in Mar 2024, its stock price has been bogged down by the disposal of shares by major creditor RHB Bank. RHB Bank may have finished selling the shares. The price bottomed at 11.7 cents and surged to a high of 46 cents - 293% gain.
Nam Cheong announced a y-o-y surge in net profit to RM635.8 million in 1HFY2024 for the six months to Jun 30 compared to RM31.7 million for 1HFY2023, primarily attributable to the waiver of debts.
Revenue rose by 12% y-o-y to RM312 million, and gross profit increased by 87% y-o-y to RM146.0 million, mainly driven by improved daily charter rates and higher utilisation of larger vessels.
In Malaysia, the national oil company Petronas is ramping up its upstream spending, with a focus on growing E&P activities to enhance domestic oil and gas output. Recently, Petronas has taken further steps by signing multiple agreements with various oil and gas companies for the development of 12 offshore fields. The rise in offshore operations, coupled with the tight supply of OSVs is expected to support the improvement in daily charter rates in 2025.
Despite ongoing macroeconomic headwinds, the outlook in the O&G market continues to favour the Group. Leveraging their proven track record in the domestic OSV chartering sector, the Group is working on capitalising on the expanding offshore O&G market and positioning themselves for long-term growth.
- Another player, $PacificRadiance (RXS.SG)$, unfortunately had to sell 33 vessels for USD200 million to pay off a chunk of debt as part of a restructuring deal concluded in 2022. Its price bottomed at 2.3 cents and surged to a high of 4.7 cents - 104% gain.
Pacific Radiance CEO James Pang, in a webinar organised by Phillip Securities on 11 Jul 2024, pointed out that there is high demand for OSVs currently because oil companies are increasing their exploration and production spending.
Mr Pang highlighted the acute shortage of OSVs.
Mr Pang said: "We think this is going to be the start of a multi-year boom that will last at least three to four years because there's virtually no new supply in the next three to four years. As a result, day rates across the markets, across the asset classes, you see a very drastic U shape."
- $Mermaid Maritime (DU4.SG)$: Its stock price has surged from 6.6 cents to 23.5 cents over the past 2 years - 256% gain.
Lim & Tan Securities expects further increases in revenue to significantly contribute to Mermaid's bottom line, said analyst Nicholas Yon.
In Yon's view, Mermaid is likely to benefit from the rising demand for decommissioning projects as numerous oil wells in the region are expected to cease production in the next decade.
Mermaid provides subsea services ranging from inspection, repair and maintenance to cable laying.
With decommissioning projects set to grow, Mermaid is also primed to secure more contracts to replenish its order book, said Yon.
Q3 Trading Plan
The OSV sector surprised me with their profits. I've added Mermaid Maritime to my portfolio in Q3.
There were mostly red days in Sep because of the market weakness. But it's still up for the month.
My assets are mostly in stocks because they give me the highest returns for non- leveraged secutities.
I'm slightly above breakeven for Mermaid Maritime. It reported weaker than expected results for 2Q2024. Together with the market weakness in Sep, it was sent down from 0.235 to 0.115. But it has bottomed and is rebounding. I think the expenses are one-off and the next quarter may be better.
Q4 Trading Plan
There is no shift for my Q4 trading plan. I will continue to invest in the OSV sector as it may enjoy a multi-year boom. And I may add Nam Cheong to my portfolio.
Dos and don'ts
Do's
1. Buy a few stocks from different sectors to diversify your risk.
2. Do your research on the securities before buying. Read up on the latest news. Make sure the securities' have good fundamentals. Know the businesses your securities are in.
3. Always take profit after a security has run up by a lot.
4. Have a stop loss strategy in place. This will prevent losses from accumulating and preserve your capital.
5. Do check on the fees of the securities.
Don'ts
1. Don't over-diversify. Focus on 5-6 stocks. If you buy more than that, your return may be lower. Keep your winners and sell your losers. Note that just 6 stocks make up 72.2% of Buffett's portfolio.
2. Don't hang on to a stock if its fundamentals have taken a turn for the worse.
3. Don't speculate. Find out the reasons for a stock's rise or fall.
4. Don't FOMO and chase. But buy after a good stock has undergone a significant correction.
5. Don't set goals that are too high, only to be disappointed. But set reasonable and reachable goals. Take regular profits and reinvest them.
6. Don't overtrade. Profits may be eroded by fees. Inefficient way of making profit. If a stock surged by a lot, you’ll will only make a small profit and miss on maximising profit.
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bullrider_21 OP : Check out the dos and don'ts.
bullrider_21 OP :
ryan endicott bullrider_21 OP : hi
bullrider_21 OP ryan endicott : Hi. Pls give a like for my post on top. Thx.
Dan’l bullrider_21 OP : Remarkably thorough (and those do’s-n-don’t deserve their own post ~;-)
bullrider_21 OP Dan’l : Thanks for your kind comments ;-)
bullrider_21 OP Dan’l : If you find my articles or TA useful, pls don't hesitate to drop a line at the link below. Thanks.
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