Daily Brief Singapore: Comfortdelgro Corp, Nam Cheong, Ever Glory United Holdings , SGX Rubber Future TSR20 and more

• A decade of stagnant revenue and declining profits, despite significant capital investments in overseas expansion.
• CDG was destroying shareholder value. Return on Equity (“ROE”) had fallen to 6.9% in 2023, almost half the 13.3% recorded in 2015. More critically, ROE remained below its 9% cost of equity.
• Lack of strategic clarity on how its growth strategy aligns with long-term shareholder value creation.

• Turnaround Specialist in a Cyclical Up-swing: After a prolonged downturn that necessitated two major debt restructurings (2018 and 2024), Nam Cheong has emerged as a leaner entity focused on vessel chartering. The company is capitalizing on a robust recovery in the Offshore Support Vessel (OSV) market, driven by increased offshore oil & gas exploration and production activities.
• Strong Financial Rebound and Earnings Visibility: The company has demonstrated a significant financial turnaround, with revenue and net income surging in the past three years. Recent long-term charter contract wins worth up to RM1.22 billion provide strong earnings visibility for the next 2-3 years, with a target of having 60-70% of its fleet on long-term charters.
• High-Risk, High-Reward Profile: Despite the positive momentum and an attractive valuation on a forward P/E basis, the company operates in a highly cyclical industry and has a history of financial distress. Key risks include dependence on oil & gas capital expenditure, potential for renewed vessel oversupply, and a corporate governance structure with significant family influence.

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• Ever Glory United Holdings is a Singapore-based provider of mechanical and electrical (M&E) engineering services, poised to capitalize on the burgeoning Singaporean construction sector. The company has demonstrated robust top-line growth, driven by an increase in M&E projects.
• Strategic acquisitions, such as Fire-Guard Engineering and Guthrie Engineering, have expanded the company’s service offerings and capabilities, enabling it to tender for larger, higher-value projects. This inorganic growth strategy is a key pillar of its future expansion.
• While revenue growth is strong, the company faces challenges with gross margin pressure due to the completion of higher-margin projects and broader inflationary pressures. Management is focused on cost control and diversification to mitigate these impacts.

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