Keyfield International (Keyfield) has been assigned a fair value of RM3.25 per share by AmInvestment Bank, based on a FY25F price-to-earnings (P/E) ratio of 11 times, which is in line with the average of local offshore support vessel (OSV) peers at 10.5 times. As a specialist OSV contractor, Keyfield operates a fleet of 13 vessels exclusively within Malaysian waters, focusing on chartering accommodation work boats, passenger support vessels, and anchor handling tug ships. The company's outstanding order book stands at RM619 million, equating to 1.1 times its FY24F revenue, providing visibility until FY26F, with RM338 million anticipated to be recognised in the latter half of FY24.

In terms of analyst calls, AmInvestment Bank's initiation with a BUY recommendation contrasts with expectations of demand fluctuations tied to Petronas' capital expenditure (capex) programme. Despite potential cuts in Petronas' capex, analysts foresee pockets of opportunity within the OSV sector due to persistent supply constraints. The company is seen as a strong proxy in the OSV segment, benefiting from a balanced fleet composition and established relationships with key clients, including Petronas. Analysts note that the demand for OSVs remains high, with continued requirements for various vessel types over the next few years, despite a projected decline in certain categories due to planned work reductions.

Keyfield's growth outlook is further supported by a tight capacity environment, which is anticipated to keep daily charter rates steady, potentially peaking by FY25F as offshore activities normalise. With plans to add three vessels to its fleet, the company is positioned to achieve an impressive three-year earnings compound annual growth rate (CAGR) of 36%. This is underpinned by an order book bolstered by high charter rates and a blend of vessel types that cater to diverse offshore needs.

The Bank project that the delivery of new vessels, combined with a blended utilisation rate of 90% and competitive daily charter rates of RM89,000 to RM95,000, will further enhance Keyfield's market standing. Despite a significant share price increase of 145% year-to-date, the company's current valuation suggests room for further appreciation, trading at a 1-year forward P/E of 7.8 times, which reflects a 29% discount compared to peer averages.

Source: AmInvestment Bank
Title: Best-in-class proxy to OSV subsector