A weaker 1Q was expected given the lower activity due to the monsoon season. Regardless, Nam Cheong (SGX:1MZ)'s outlook remains supportive, with improved utilisation expected on the back of long-term charters, contribution from its shipbuilding segment in 2H as well as its continuous effort in balance sheet deleveraging.
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Results review.
Nam Cheong's 1Q26 reported earnings surged 160% y-o-y, mainly driven by disposal gain of a vessel amounting to MYR59.3m. However, core net profit came in lower than our expectations, down 15% y-o-y to MYR24.6m due to higher operating costs in the Middle East, driven by increased crew costs and insurance premium arising from geopolitical tensions.
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As a result of these higher costs, gross margin dropped to 42%, from 49% in FY25, and lower than management's full-year target of 50%.
Balance sheet significantly improved
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Singapore Research 
