Despite Kim Heng’s net loss of $5.9 million for the FY2021 ended December, SAC Capital analyst Lim Shu Rong remains positive on the integrated offshore and marine value chain services provider’s prospects.
During the FY2021, Kim Heng saw revenue improve 68% y-o-y to $63.2 million as all segments – except equipment rental – registered growth. During the year, the chartering and towage segment were the largest revenue contributor.
Revenue for chartering and towage surged 172% y-o-y to $29.4 million and represented 47% of Kim Heng’s total revenue.
EBITDA for the FY2021 had also jumped 7.7 times y-o-y to $5.4 million.
In her unrated report dated March 30, Lim sees further headroom for charter income to grow. The Russia-Ukraine war, which has further tightened oil supply in the market, supports higher oil prices.
“These are positive catalysts for more offshore production activities which translate to higher day rates for vessel charter,” writes Lim.
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“[Kim Heng's] margin is expected to expand further as well following higher utilisation of its fleet,” she adds.
Kim Heng has also made efforts to grow in the renewable space. In late 2021, the company had secured installation works for an onshore windfarm project in South Vietnam.
The consideration for that contract will come in the form of monthly project milestones of US$0.24 million ($0.33 million) for a period of 30 months beginning from November 2021.
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“Separately, the group has also completed its cable laying works for Yunlin offshore windfarm project in Taiwan. Vessels serving the project are currently off-charter and stationed in Taiwan. There is no work at the moment given the off-peak season. The next season will start in 2Q2022, pending the group securing new projects,” says Lim.
Kim Heng is currently in a net liability position of $8.5 million with a net gearing ratio of 70%
“Being in a capital-intensive industry, the group uses mainly loans to fund its capital expenditure (capex) requirements. Management is closely monitoring its loans. Kim Heng is trading at an EV/EBITDA of 18.6x,” the analyst writes.
As at 4.59pm, shares in Kim Heng are trading 0.3 cent lower or 3.33% down at 8.7 cents.
