These offshore stocks are winning big as oil price bloodbath continues

Nam Cheong is the biggest winner.

The protracted and unprecedented slide in oil prices had triggered a domino effect among offshore firms. The FTSE Oil and Gas Index had lost around 20% of its value since September, and stocks like big-cap stocks like Keppel, Sembcorp Marine, and Cosco have plunged the most in recent months.

But a few firms are weathering the storm rather well. Analysts are particularly upbeat about the prospects of smaller players such as Nam Cheong, Ezion, and Pacific Radiance.

“Considering all of the oil and gas players together, we see that the best performing stock for this year is Nam Cheong (+22%) boosted by record vessel wins and strong earnings. On the other hand, the worst performer in our list is Ezra Holdings (-52%), mainly due to low order wins for this year and lack of visibility ahead, as well as a deteriorating balance sheet,” noted OCBC.

Meanwhile, DBS notes that these resilient firms are set apart by their strong balance sheets and secure cash flows.

“While Nam Cheong's vessel types are for shallow waters and thus will not be as badly hit vs deep water vessels, the fact that it is a speculative builder makes it vulnerable to changes in capex cycles. We have cut Nam Cheong’s earnings by 7%/6% for 2015 and 2016 respectively, in view of the potential slowdown in sales momentum and profit margins for new vessels,” DBS stated.

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