KUCHING: Higher utilisation of vessels and improved charter rates have given a big boost to the earnings of Sealink International Bhd group, with its net profit surged to RM11.25 million in third quarter ended September 30, 2024 (3Q2024) from RM2.28 million a year ago.
The earnings growth was in line with expansion in revenue which jumped to about RM39.8 million from RM30.3 million in 3Q2023.
This has resulted in company’s earnings per share increased to 2.25sen from 0.46sen.
In the current quarter under review, Sealink derived nearly the entire group revenue or RM39.74 million (3Q2023:RMRM27.1 million) from its vessel chartering division, with the remaining RM45,000 (RM3.18 million) chipped in by the shipbuilding division.
The Miri-based company attributed the better performance of the vessel chartering division to higher vessel utilisation and improved charter rate.
“The decrease in revenue of shipbuilding division was due to ship repair activities were mainly servicing own vessels,” Sealink said in explanatory notes accompanying its financial results.
The 3Q2024 financial results came in with much improvement as compared to the immediate preceding quarter (2Q2024) when group net profit stood at RM10.04 million (3Q2024:RM14.52 million) or an increase of RM4.48 million (45%) on revenue of RM35.89 million (RM39.8 million) or up by RM3.9 million (11%) in the current quarter.
On a nine-month period in 2024 (9m2024), Sealink delivered strong group net profits of RM25.66 million (9m2023:RM1.35 million) as revenue surged by 30 per cent to RM104.4 million (RM80 million).
The vessel charter division generated RM102.1 million (RM75.7 million) while the shipbuilding division contributed RM2.33 million (RM4.32 million).
Commenting on prospects going forward, Sealink said: “The group holds a positive outlook about its prospects, anticipating improved results driven by increasing demand for our vessels, our on-going strong momentum and customer demand, as evidenced by our (financial) results, underpin this optimism.
“We believe that 2024 holds promise for the oil & gas (O&G) industry, aligning with the positive outlook expressed by Petronas (Petroliam Nasional Bhd) regarding the sector’s prospects. Based on the recent release of the Petronas Activity Outlook (2024-2026), the activity outlook remains positive in line with the continued recovery that we have seen throughout 2023.
“Specifically, Petronas mentioned that this is positive for activities relating to repair and maintenance which are required for the integrity of offshore facilities. With this, the demand for OSVs (offshore support vessels) is expected to remain steady going into 2024, especially for vessels supporting drilling and wells projects. It sees higher demand for OSVs in 2024-2026 compared with the previous forecast, and this is an opportunity for local players like us,” added Sealink.
Sealink expects capital expenditure (capex) of oil majors to continue its uptrend this year, suprassing pre-pandemic levels on the heels of the massive under-investment throughout the past few years. This, said the company, will reflect well on the shipping sector.
“We are confident that the demand for OSVs will continue to strengthen this year, just as encouraging as the acceleration in demand for OSVs is the continued reduction in the available supply of OSVs. The number of OSVs currently available is very limited, indicating that the supply of vessels will continue to decline gradually.
“Accordingly, it is our view that the industry is positioned to benefit from the increase in demand over medium to long term with a slowly shrinking supply of vessels. We believe this imbalance in supply and demand will continue to provide the opportunity for day (charter) rate and utilisation to increase.”
On the group’s financial position, Sealink said it has reduced its term loans from RM10 million in December 2023 to RM3.4 million in September 2024, a reduction of 66 per cent.
“This speaks well of the viability of the group’s business. At the same time, with the reduced gearing of the group, we have a stronger balance sheet to take on additional financing to fund expansion when opportunities arise.”
Sealink said the group is looking to secure more new vessel charters, and it has embarked on initiatives to enhance its bidding competitiveness.
These initiatives, it said, will augment its business and operational resilience and help the group to deliver projects in line with its customers’ needs and expectations.
For the group’s shipbuilding division, Sealink said it will prioritise constructing vessels catering to niche markets, and upgrading its docking facilities for ship repairs.
“The group will continue to pursue and seek opportunities to achieve a better financial performance this year. Moving forward, we will leverage on our strength and improve efficiency to achieve better results for the group,” added the company.
