Keyfield cautiously optimistic for FY2025 amid macroeconomic headwinds

New Straits Times

19-05-2025

KUALA LUMPUR: Keyfield International Bhd, an offshore support vessel (OSV) provider, is adopting a cautiously optimistic outlook for the financial year ending December 31, 2025 (FY2025), despite a slower-than-usual start to the year and broader macroeconomic uncertainties.
Group chief executive officer and executive director Datuk Darren Kee Chit Huei said the company's performance would continue to hinge on fleet size, utilisation rates, and daily charter rates, which are the key metrics that drive both revenue and profitability.
"These three factors will determine the revenue of the company as well as the bottom line of the company. For us to increase the revenue, we have to achieve, hopefully, all three of the above," he told Bernama in an interview recently.
For the first quarter ended March 31, 2025 (1Q2025), Keyfield International posted a lower net profit of RM20.68 million compared with RM30.30 million in the same period last year, while revenue declined by 18.5 per cent to RM86.75 million from RM106.39 million, mainly due to reduced vessel revenue.
The group said revenue from its vessels fell by 10.3 per cent, or RM8.3 million, to RM72.6 million from RM80.9 million year-on-year, while revenue from third-party vessels declined by RM11.4 million (44.7 per cent) to RM14.1 million (1Q2024: RM25.5 million).
Kee noted that while FY2024 was a strong year, FY2025 started slowly due to monsoon season disruptions, which typically result in lower vessel utilisation during the first quarter.
"We still have several vessels that are working during this period. But, during this first quarter, utilisation is typically low. Not just us. All the vessel companies would encounter this problem," he explained.
Despite global uncertainties, including the ongoing tariff war and a slight decline in oil prices, Kee said business operations remained unaffected.
"Business is still as usual for us. We do not have anything that is adversely affecting our vessel at the moment," he affirmed, adding that Keyfield International's exposure to overseas income was minimal.
Addressing scheduled vessel dry docking in the first quarter, Kee said the company has intentionally chosen this off-peak period to minimise financial impact. However, he acknowledged that the bottleneck at Labuan Shipyard had caused some delays.
On geographical deployment, Kee said at the moment 95 per cent were in Malaysia, and the company's vessels were active in Sabah, Sarawak, Kemaman, and the joint development area between Malaysia and Thailand.
The company also has vessels operating in India and the Middle East.
Recently, Keyfield International's wholly-owned subsidiary Keyfield Offshore Sdn Bhd has also entered into a memorandum of understanding with PT Elnusa Trans Samudera (ETSA) to explore and pursue marine services opportunities, primarily in the oil and gas as well as related industries across Indonesia.
Kee revealed that the company has acquired a cable-laying barge set to begin work in Saudi Arabia soon as part of plans to increase international presence.
"We should try to aim to increase our presence in the Middle East," he said, naming Saudi Arabia, Kuwait and Qatar as priority markets.
On the local offshore support vessel (OSV) sector, Kee pointed to an ageing fleet in the market and Petronas' reported concern over a potential shortage of vessels.
"We are lucky. We have several young vessels which will continue to give us the edge," he said, highlighting that many other players have not been investing in new OSVs.
Keyfield currently owns 15 vessels, with an average utilisation rate last year of 80.4 per cent. However, for FY2025, Kee anticipates a slightly lower utilisation due to a slow start and dry-docking schedules.
"Our contract in hand is about RM420 million as of today," he added.
Kee also touched on the company's capital strategy. Keyfield raised RM200 million through a sukuk issuance in December last year, part of a RM1 billion AA3-rated sukuk programme.
"We have not fully used up the bond proceeds. At the moment, there is no immediate need to issue another round of sukuk bonds," he said, adding that the company maintains a clean balance sheet with healthy internal cash flow.
Kee noted that Keyfield International targets to pay out 20 per cent of its net profit as dividends, as stated in its prospectus.
"But last year, our overall payout was around 39 per cent," he added.
For the financial year ended Dec 31, 2024 (FY2024), the group declared a fourth interim dividend of three sen per share, bringing its total dividend payout for FY2024 to 11 sen per share. This represents a dividend payout ratio of 38.9 per cent, almost double the company's initial target of a 20 per cent payout ratio.
Kee said the group aims to maintain a strong dividend yield, currently close to 6.0 per cent, while also being viewed as a growth stock.
Keyfield International is also gradually diversifying into non-oil and gas segments, with a goal for such activities to contribute around 20 per cent of total revenue in the medium term. The newly acquired cable-laying barge in Saudi Arabia marks a move in that direction.
"We hope to be able to diversify our income base so that at least 20 per cent of our income base is derived from the non-oil and gas sector," he said.
Kee reiterated a "cautiously optimistic" stance on the OSV market, noting that demand for accommodation vessels remains stable due to their critical role in offshore maintenance.
"Maintenance work needs to be carried out every year, even when oil prices are down. We are still bullish and optimistic that the demand will continue to be there," he emphasised.