• The Offshore Support Vessel (OSV) sector is riding high now because charter rates are high, thanks to a tight supply of vessels and strong demand. • These vessels are essential for supporting offshore oil, gas, and wind projects by moving equipment and crews. But this sector is not easy for ordinary investors to grasp—well, the vessels are pretty technical, there's barely any analyst coverage in Singapore except for Pacific Radiance, and the sector's key risk is a crash in oil prices. • But valuations are cheap, here on SGX and Bursa Malaysia. Singapore-listed Nam Cheong Ltd is going for around 3X PE, for example, even after chalking up RM233 million in core profit in 2024. • Then there's CH Offshore. Its stock price has trended down after news in March 2025 of an upcoming 2-for-1 rights issue. Could it be poised for a rebound? In morning trade today, it surged as much as 21% to 1.7 cents.  • For more on CH Offshore, read the article below, which was originally published in Investors Edge. |
By Ven Sreenivasan
| CH Offshore is back in the game, profitable, well-capitalised, and backed by one of the region’s strongest offshore vessel builders. The company is currently in the midst of raising S$14 million through a 2-for-1 rights issue, boosting its share base to 2.1 billion shares (from 704 million previously). This financial buffer allows the company to scale up its offshore and marine operations, including vessel acquisitions and upgrades. A key advantage is its major shareholder, Baker Technology Ltd, which owns 55% of CH Offshore. This strategic relationship, established in 2018, gives CH Offshore access to favourable newbuild pricing and potentially the ability to manage Baker’s own vessel fleet. The link is familial too: CH Offshore CEO Dr Benety Chang also controls Baker Tech, where his daughter Jeanette Chang serves as CEO. |
Fleet expansion on the horizon
CH Offshore currently owns six offshore vessels, and while there is no formal statement about doubling the fleet, the company has expressed interest in increasing its fleet significantly over the next five years.
This aligns with its expectation of rising demand in offshore energy exploration and subsea infrastructure.
A turnaround year
After consecutive losses since FY2020, CH Offshore posted a profit of US$1.3 million for the year ended December 2024.
Earnings before interest, tax, and depreciation (EBITDA) stood at nearly US$7 million, signalling strong operational performance.
Most notably, Return on Capital Employed (ROCE) has improved to 0.7%, up from -14.5% three years ago, a strong indicator of improved capital efficiency and asset optimisation.
ROCE, calculated as Net Operating Profit After Tax (NOPAT) divided by Capital Employed (Total Assets – Current Liabilities), is a key measure of profitability and capital productivity.
The rebound suggests CH Offshore is now using fewer assets to generate more returns, thanks to the disposal of underperforming assets and tighter cost control.
Financial firepower for growth
In a statement issued over the weekend, CH Offshore addressed shareholder questions following the rights issue:
| “New-build prices are elevated owing to high inflation and interest rates, and design decisions are complicated by uncertainty over which alternative fuels oil majors will ultimately supply. Strengthening the balance sheet now gives the company flexibility to move quickly when suitable younger second-hand vessels become available, and to place orders for new-builds or initiate specification upgrades when pricing and design clarity improve.” |
The board added that charter rates are expected to continue rising, and the company intends to maintain its position as a vessel owner and manager in the offshore & marine space.
Undervalued relative to cash flows?At a market cap of just S$31 million (post rights issue completion), CH Offshore is currently trading at only 2x EV/EBITDA, a metric widely used by private equity investors to assess cash flow returns and payback periods. Given the sector upcycle and strong cash backing, this could signal deep value for investors seeking exposure to offshore asset plays. “The board believes that the company remains well-positioned to capitalise on industry trends and growth opportunities.” |
