This article first appeared in The Edge Malaysia Weekly on February 3, 2025 - February 9, 2025

KEYFIELD International Bhd (KL:KEYFIELD), the offshore support vessel (OSV) chartering group that was listed on April 22, 2024, aspires to expand its business overseas, especially to markets such as the Middle East and India. However, to compete in those markets, Keyfield’s largest shareholder and group CEO Datuk Darren Kee Chit Huei says the group will have to invest more in Dynamic Positioning 2 (DP2) types of vessels.

“We have been approached many times to work in the Middle East and India, but we are quite pampered here [in Malaysia], we are comfortable over here because if there are any issues, within just two hours we can fly over here and solve the problem.

“But we need to ask ourselves, do we just want to be a ‘jaguh kampung’? When business is really good, we can’t even cope with the demand over here, but we need to grow the company, to have some exposure on the different requirements in different geographical areas,” Kee tells The Edge in an interview onboard Keyfield Wisdom, a 500-pax capacity accommodation barge docked at Labuan Shipyard & Engineering Sdn Bhd’s shipyard.

A dynamically positioned vessel is a type of OSV that automatically maintains its position, either at a fixed location or on a predetermined track, exclusively by means of thruster force. The system uses inputs from various sensors and systems to maintain its position.

Keyfield Wisdom is the largest accommodation workboat (AWB) or barge that Keyfield has in its fleet. However, it is not a DP2 vessel and utilises an eight-point mooring system. Nevertheless, it is the largest AWB in service in Malaysian waters.

Keyfield is in growth mode. After raising RM188.1 million through its initial public offering (IPO), the group wasted no time and went on to issue RM200 million worth of sukuk in December 2024 to fund its expansion. The sukuk is the only long-term debt on its books as the company had no debt prior to this issuance.

This has led to some concerns that the group might be expanding too rapidly in a still rather uncertain market, with the US Energy Information Administration (EIA) forecasting that the crude oil price will fall 8% to an average US$74 per barrel this year, and further to US$66 per barrel in 2026.

On this, Kee says one of the fastest ways to grow the business is to increase its fleet size, and this means the group needs a war chest to prepare for whenever a good opportunity for the purchase of a vessel comes along.

“These are not priced [at] RM5 million or RM10 million; these are all in US dollars. So, we need to build up our war chest so whenever there is a good opportunity for us to buy a good vessel, I would take it,” says Kee, the investment banker turned entrepreneur who founded the company. He is Keyfield’s largest shareholder with 27.02% equity interest.

Already, Keyfield has acquired two DP2 AWBs. On June 25, 2024, it acquired a DP2 AWB from Jingjiang Nanyang Shipbuilding Co Ltd and Nantong Shunyang Trade and Development Co Ltd at a cost of US$30.5 million.

The 90m-long workboat is scheduled for delivery by February 2026.

It has also acquired a second-hand DP2 AWB named MV Belait Barakah from Belait Barakah Sdn Bhd for US$6 million, which is currently undergoing rectification and activation.

“Currently, we have about five DP2s, and I said we are looking for good opportunities as well. If we want to fortify our position as the real dynamic positioned player, increasing the number of DP2 vessels is something that we need to look at,” says Kee.

Keyfield is also diversifying its services into supplying anchor handling tug supply (AHTS) vessels. Prior to the listing, Keyfield had only one AHTS, as it is mainly in the business of AWB charter for the oil and gas (O&G) industry. However, in August 2024, the company acquired MV Aulia, an AHTS, from Fun Success Ltd for US$7.8 million.

Recently, Keyfield entered into an agreement with Sinocommerce Harbour Engineering Co Ltd to acquire a five-year-old platform supply vessel (PSV) for US$17.6 million (RM79.2 million). This acquisition will be supported by the RM200 million sukuk that it had issued last year.

Keyfield is confident of its capital planning and the outlook for the OSV market as currently there is a disequilibrium in the supply and demand of vessels in Malaysia. The difficulty in securing funding for vessels means that not every OSV player can increase their fleet size.

“The market is very short of vessels at the moment. Nobody is building new vessels (from a Malaysian perspective). The yards on the other side in China are also getting very demanding in terms of the payment scale for newly built vessels,” says Kee, noting that Keyfield’s peers and competitors are not building nor acquiring new vessels.

The major OSV players in Malaysia include Dayang Enterprise Holdings Bhd (KL:DAYANG) and its subsidiary Perdana Petroleum Bhd (KL:PERDANA), Petra Energy Bhd (KL:PENERGY), Icon Offshore Bhd (KL:ICON), Alam Maritim Resources Bhd (KL:ALAM) and also Carimin Petroleum Bhd (KL:CARIMIN).

Kee adds that one of the reasons for Keyfield to raise debt via the sukuk is because it will be easier for the group to acquire vessels, now that it has a war chest of up to RM1 billion.

“When we signed for a 90m newly built vessel about six to seven months ago, the payment scheme was staggered, like buying a house. It’s going to be harder for investors to build new vessels, as banks still adopt the view that vessel financing is something that they really need to evaluate in detail,” he says. “They don’t mind giving [financing] working capital for O&G companies, but to do financing for vessels, they are a bit more careful.”

Keyfield is also chartering third-party vessels at the moment to fulfil clients’ needs as it doesn’t have enough vessels to meet their demand. This is an industry-wide problem, with foreign vessels being used to serve the O&G sector.

In March 2024, Malaysia OSV Owners’ Association president Jamalludin Obeng said Malaysia has around 250 to 270 local-flagged vessels serving the O&G industry. This compares with the local requirement of over 300 vessels then.

Earlier studies have shown that this shortage amounts to around RM1 billion in annual market lost opportunity for local players.

“So, I’m confident [on the OSV market] as long as the oil price doesn’t fall down to US$20 to US$30 per barrel. But even if it does, like you saw during the Covid-19 pandemic time of 2020, 2021 and 2022, we still make profits because our workboats are still being used,” says Kee.

For the nine-month period ended Sept 30, 2024 (9MFY2024), Keyfield’s net profit came in at RM181.45 million, more than double that of the same period in FY2023. The group had zero borrowings as at Sept 30, 2024, although this has changed due to the issuance of the sukuk in December.

Since its IPO, Keyfield’s counter has risen 160% to last Friday’s closing price of RM2.34 which valued the company at RM1.88 billion.

Only two analysts cover the stock, both with “buy” calls to give Keyfield a consensus target price of RM3.22. 

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