Nam Cheong (1MZ) Q3 2023 earnings summary

Executive summary

• 9M2023 revenue rose 30% YoY to RM350.2m, gross profit rose 71% to RM124.8m, and net profit increased 32% to RM94.4m.

• 3Q2023 revenue increased 43% YoY to RM149.7m and net profit rose 57% to RM62.7m.

• Earnings benefited from stronger charter rates and a RM44.3m gain on disposal of property, plant and equipment in 9M2023.

• Gross margin remained above 30% for a third consecutive quarter; Scheme Creditors approved the New NCL Scheme, with High Court sanction pending.

Financial highlights

• 9M2023 operating profit was RM130.7m, up 35% YoY; profit before tax was RM115.2m, up 41%.

• 9M2023 other income was RM48.0m, down RM2.6m from RM50.6m; higher disposal gains and impairment write-backs partly offset the absence of debt-waiver and FX gains.

• 9M2023 finance costs rose 8% to RM20.7m, mainly due to vessel financing; income tax expense increased 98% to RM20.8m.

• 9M2023 net cash from operating activities was RM30.5m; investing activities used RM9.0m and financing activities used RM2.9m.

Outlook and guidance

• Improving offshore and marine sector conditions and favourable oil-demand expectations are expected to support long-term OSV demand and business recovery.

• Management aims to complete the debt restructuring to improve financial flexibility and pursue opportunities in the growing sector.