PETALING JAYA: TA Research has valued Main Market-bound Keyfield International Bhd at RM1.42 a share, a 58% premium to its initial public offering (IPO) price of 90 sen a share.
The research house’s call is based on Keyfield’s historical financial performance, double-digit profit margins and comparison with its listed peers.
“We ascribe a target price-earnings (PE) multiple of 10 times financial year 2024 (FY24) fully diluted earnings per share (EPS), hence deriving a fair value of RM1.42 per share,” the research house said in a note yesterday.
TA Research said, for comparison, Keyfiled’s listed peers are trading at trailing PE multiples of between 7.5 and 16.5 times 2023 EPS.
Based on its IPO price of 90 sen a share, Keyfield is priced at a trailing PE of 6.4 times annualised FY23 EPS.
Slated to be listed on April 22, Keyfield’s business revolves around chartering its own accommodation vessels and providing related onboard services such as accommodation, catering, housekeeping, laundry and medical support services to oil and gas companies working offshore.
Additionally, it engages in the chartering of third-party accommodation vessels and offers the same services.
As of Feb 29, 2024, Keyfield owns 11 accommodation vessels, of which eight are accommodation work boats (AWBs), two are smaller accommodation vessels and one is an accommodation work barge.
On the group’s outlook, citing independent market researcher Providence Strategic Partners Sdn Bhd (PSP), TA Research said the AWB chartering market size registered an estimated compound annual growth rate (CAGR) of 6.4% between 2017 and 2023.
“PSP forecasts that the AWB chartering market size in Malaysia will register a CAGR of 6% between 2024 and 2026. This is in line with the anticipated growth in the local upstream oil and gas industry, where Petroliam Nasional Bhd (PETRONAS) estimates an increase in capital investment allocation of 43% from 2023 to 2027 compared with 2018 to 2022,” the research house noted.
In FY22, Keyfield experienced growth in both its revenue and core net profit, reaching RM236.2mil and RM48.1mil, respectively, up from RM139.8mil and RM22.5mil, respectively, in FY21.
TA Research expects Keyfield to register 76% growth in revenue in FY23 due to increasing utilisation rates and average daily charter rates (DCR).
“We expect revenue growth to slow to 14.1% and 16.2% for FY24 and FY25, respectively, as the utilisation rate stabilises and most of the growth will be from an increase in DCR,” TA Research noted.
The research outfit expects Keyfield’s core net profit to grow by 113.4%, 14.7% and 17% in FY23, FY24, and FY25, respectively, in line with revenue growth and margin expansion from ownership of vessels rather than chartering third-party vessels.
Overall, TA Research’s FY23 to FY25 earnings projections are grounded on several key assumptions, including Keyfield’s planned acquisition of two vessels in FY24 and one vessel in FY25, an anticipated utilisation rate of its own vessels between 80% and 81% in FY23 to FY25, and a projected gross profit margin to be maintained between about 40% in the same financial period.
