Kenanga Investment Bank Bhd (Kenanga Research) has maintained its OUTPERFORM call on Keyfield International Bhd, with a target price of RM3.18, citing the acquisition of a DP2-enabled platform supply vessel (PSV) as a positive step forward. The RM79.2 million purchase, announced through a Memorandum of Agreement, is expected to bolster Keyfield's fleet and position in the local offshore support vessel (OSV) market, though the research house noted that earnings contributions from the vessel have not yet been factored in due to the absence of a confirmed charter.

The vessel, named Keyfield Gratitude, was acquired for US$17.6 million, inclusive of RM9 million in rectification costs. Built in 2019, it accommodates up to 59 crew members and is set for operational readiness by June 2025 following retrofitting and approval from the Marine Department to be Malaysia-flagged. The research house highlighted that the acquisition price aligns with market valuations, as similar vessels built in 2016 are listed for US$14 million, excluding potential retrofitting expenses.

Keyfield's financial capability to fund the acquisition is reinforced by an RM200 million Sukuk Wakalah issuance in December 2024. Based on current market conditions, a DP2 PSV could generate RM100,000 in daily revenue, translating to an estimated RM3.6 million earnings boost at 50% utilisation. Kenanga Research estimates this would contribute a 1.5% uplift to projected earnings and the target price, but they remain cautious until a charter agreement is secured.

The acquisition follows Keyfield's recent fleet expansions, including the delivery of Keyfield Itqan, a 152-pax accommodation work barge, in July 2024, and Keyfield Aulia, a second-hand anchor handling tug supply vessel, in August 2024. Both vessels are expected to contribute to earnings from the fourth quarter of financial year 2024 (FY24). Analysts are optimistic about the OSV market's outlook, citing increasing demand and tight supply, which is driving upward trends in daily charter rates (DCRs).

Kenanga Research maintains its valuation of RM3.18 based on an 11 times forward price-to-earnings ratio for FY25, reflecting a premium over the 10.2 times industry median due to Keyfield's younger and higher-specification fleet. The research house remained confident in Keyfield's prospects, highlighting its exposure to the robust OSV market, its advanced fleet with an average age of eight years, and its role as a panel contractor for Petronas, which opens opportunities for additional third-party charters.

However, risks to the call include potential declines in Brent crude prices, unplanned vessel downtime, and reduced capital expenditure by oil producers. Despite these challenges, Kenanga Research views Keyfield as well-positioned to benefit from the strong OSV demand and its strategic investments in fleet expansion.