Keyfield International - A Hidden Gem in the Offshore Support Vessel Industry?

If you’re on the lookout for a solid investment in the offshore support vessel (OSV) sector, Keyfield International deserves serious consideration. The company has positioned itself as a key player in the OSV market, offering plenty of growth potential and a stable outlook for the years to come.

Keyfield is a specialized OSV contractor, focusing exclusively on the rental of vessels essential for offshore oil and gas operations. Their fleet consists of accommodation work boats (AWBs), passenger support vessels (PSVs), and anchor handling tug ships (AHTS). These vessels are critical for transporting personnel, managing anchor systems, and providing accommodations for offshore workers. With a fleet of 13 vessels operating in Malaysian waters, Keyfield has built a solid foundation in the local market.

A standout feature of Keyfield is its substantial order book, valued at RM619 million, which offers revenue visibility through to 2026. This order book represents a strong pipeline of future work, ensuring stability in the company’s earnings. A significant portion of this, RM338 million, is expected to materialize in the second half of FY24.

The OSV market is currently benefiting from a tight supply environment, with limited new vessels being constructed due to financing constraints. As a result, daily charter rates (DCR) for OSVs remain robust, and Keyfield’s DCR is projected to stay steady, providing solid revenue streams. With three new vessels slated for delivery by 2026, the company is poised to see an impressive 36% annual earnings growth from FY23 to FY26.

Despite a 145% rise in share price this year, Keyfield still offers significant upside potential. The company’s price-to-earnings (P/E) ratio stands at 7.8x, which is a 29% discount compared to its industry peers. This lower valuation makes Keyfield an attractive buy, particularly given its growth trajectory and market position.

In the coming years, Keyfield aims to expand its fleet, with the Keyfield Itqan set to join the fleet by the end of FY24, followed by a new AWB with DP2 technology by FY26. These new vessels will strengthen the company’s position in the OSV market, enabling it to meet growing demand from clients, including key partners like Petronas and other Petroleum Arrangement Contractors (PAC).

Additionally, institutional investors currently hold a substantial portion of Keyfield’s shares, reflecting confidence in the company’s prospects. With the oil market stabilizing and ongoing demand for offshore support vessels, this could be an excellent opportunity to invest before the stock gains more momentum.