Shin Yang Group Berhad (SYGROUP), one of the major shipbuilding and repair players in Sarawak, is well-positioned to capitalise on a potential boom in new orders for offshore support vessel (OSV) newbuilds, attributable to strong demand anticipation, according to Kenanga.
The group's shipbuilding and repair division is projected to experience growth in the following years due to a potential upcycle driven by the OSV market.
Analysts noted that the shipbuilding division is in a highly favourable position within the local shipbuilding market, poised to capitalise on the surge in demand for OSVs driven by high sustaining daily charter rates (DCRs). Notably, demand for second-hand OSVs is growing as the local market is experiencing a supply shortage.
While the total demand and supply data is unavailable, there are signs that the DCRs are improving for Keyfield International Berhad and Icon Offshore Berhad.
On the other hand, the group's shipping division, contributing about two thirds of the group's revenue/profit, is expected to remain stable year-on-year due to resilient local demand.
The shipping division, operating a fleet of 199 vessels with a gross tonnage of approximately 326,000 MT, will remain largely stable in 2025, supported by its domestic operations and the market stability that provide consistent lifting volumes. Additionally, the group will focus on operational cost management to sustain its operating margin at 15%.
Analysts value SYGROUP at RM1.17 (Target Price, TP) and recommend an ADD.
As at 12:11pm, the group's share traded at RM0.855. (Stock updates from )