RHB initiates Orkim coverage with RM1.14 target

KUALA LUMPUR: RHB Research has initiated coverage on marine transportation company Orkim Bhd with a "Buy" recommendation and a target price of RM1.14.

The research firm said Orkim's core net profit is expected to grow at a compound annual growth rate (CAGR) of five per cent from financial year 2025 (FY25) to FY28, supported by contributions from new vessels, higher daily charter rates (DCRs) and increased operating days.

In a note, RHB Research said earnings were forecast to reach RM95 million in FY27 and RM99 million in FY28, driven by the full-year contribution from the Orkim Jade and Orkim Ruby vessels, alongside selective fleet rejuvenation.

It said Orkim also offered strong earnings visibility, backed by 19 existing contracts and an RM593 million time charter (TC) order book as of August.

The order book comprised RM106 million in firm backlog and RM487 million in extension backlog.

"Strong recurring earnings and dividend visibility are the base case," RHB Research said.

The firm also said Orkim's fleet expansion and efficiency gains would provide further growth catalysts amid supportive industry conditions.

Orkim owns and operates 19 vessels with a total load capacity of 253,000 deadweight tonnes (DWT), comprising 15 clean petroleum product (CPP) tankers, two medium-range CPP tankers and two liquefied petroleum gas (LPG) tankers.

The vessels primarily serve major energy companies in Malaysia, with the group operating under time charter, consecutive voyage charter, contract of affreightment and spot charter arrangements across 25 domestic and about 65 international locations.

RHB Research said Orkim's long-standing relationships with strategic customers, including Petroliam Nasional Bhd (Petronas) and major oil companies, provided long-term revenue visibility, with some relationships extending up to 17 years.

It also highlighted Orkim's relatively young fleet, with an average vessel age of about 12 years, and shallow-draft capabilities that allow its vessels to access smaller ports.

The firm said the younger fleet typically offered higher vessel uptime, more efficient engines, lower carbon emissions and enhanced safety features.

These factors, together with Orkim's owner-operator model, supported greater retention of charter income and tighter operational control, it said.

Fleet utilisation had remained resilient at about 90 per cent over the past four years and was expected to be maintained despite five vessels undergoing scheduled maintenance and dry docking in FY26 and FY27.

RHB Research said the dry-docking schedule had been staggered across the fleet, allowing the remaining vessels to continue operating, while the downtime for each vessel represented only a portion of total available vessel days.

Looking ahead, key risks for the group include weaker demand for refinery products, piracy and armed robbery, lower DCRs, unscheduled maintenance, higher repair and maintenance costs, and geopolitical conflicts.