Shares of Nam Cheong jumped as much as 15.4% after a broker highlighted the Singapore-listed offshore vessel builder could benefit from a boom in Malaysia's oil and gas sector.
Nam Cheong shares were up 10.3% at $0.215, with more than 38.5 million shares traded. This was 7.1 times its average full-day volume traded over the last five sessions. The company's shares have surged 65% so far this year.
Amfraser initiated coverage of Nam Cheong with a buy rating and a target price of $0.28, adding that the company was the largest offshore vessel builder in Malaysia, with an estimated 50-75% market share.
“(Nam Cheong) is positioned to ride the oil & gas up-cycle set in motion by Petronas' massive 5-year capex budget,” Amfraser said in a report.
Last year, Malaysia's national oil company Petronas revised its 5-year capital expenditure target upwards to 300 billion ringgit ($123 billion).
Amfraser said although 2011 was a poor year for Nam Cheong, order wins have since recovered and it expects the company's earnings per share to jump by 56% this year.
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