Avangaad Berhad
Thu, 20-Mar-2025 07:33 am
by Jayden Tan • Apex Research

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AVANGAAD (5259)

Target Price (RM)

0.440

Recommendation

Buy

Summary

  • Avangaad Berhad (formerly E.A. Technique) is an integrated marine services provider, with services include petroleum product tankers, FSO operations, port marine services, and shipbuilding/repair with a fleet of 26 vessels.

  • The company has successfully exited PN17 status following a strategic financial restructuring, which revolves around a combination of debt waiver and capital injection. With a robust order book, active tender pipeline, and ongoing business expansion efforts, Avangaad is well-positioned for high growth over the foreseeable future.

  • We assigned a fair value of RM0.44, derived from a 16.0x PER pegged to FY26F EPS, of 2.8 sen reflecting Avangaad’s growth potential post-restructuring along with three-star ESG rating.

 

Investment Highlights

 

Integrated Marine Services Provider. Avangaad (formerly E.A. Technique) is unique in Malaysia as the only provider offering four distinct marine services — petroleum product tankers, offshore floating storage (FSO), port marine tug and mooring services, and marine engineering (shipbuilding/repair). The integrated business model provides diversified income streams across the oil & gas and maritime value chain, reducing reliance on any single segment. The Group operates a large base of fleets (26 vessels as of end-2024), enhancing operational efficiency and strengthening client confidence.

 

Turnaround and Financial Revival. After a turbulent period in 2020-2021, marked by significant losses from an FSO conversion dispute, Avangaad has successfully restructured its finances and exited PN17 status as of 20 Feb 2025. A strategic capital injection in mid-2024 (795.8m new shares for RM79.6m) played a pivotal role in stabilising the balance sheet. The restructuring also included a RM171.0m debt waiver under a Scheme of Arrangement, which significantly strengthened equity position, doubling net assets per share to RM0.22. Since then, the Gorup has recorded ten consecutive profitable quarters through end-2024, reinforcing its turnaround trajectory.

 

Secured several contracts and robust orderbooks. With its PN17 status now behind, Avangaad is focused on expansion and recovery. The Group aims to secure additional long-term charters to strengthen its order book and expand its fleet through strategic acquisitions or newbuilds to capitalize on rising market demand. As of its latest update, Avangaad’s order book stands at RM408.4m (including optional contracts). Recent contract wins highlight growth trajectory, including a 3+3-year fast crew boat charter (c.RM39.4m, commencing 1Q 2025) and multiple tugboat contract extensions with Petronas FLNG1 (c.RM63.8m for 2-year terms). With favorable industry conditions and a solid financial footing, Avangaad is well-positioned to leverage the ongoing upswing in oil & gas marine activities.

 

Unlocking Growth Potential: FSO Deployment.  Avangaad’s largest fleet asset, MT FOIS Nautica Tembikai (FSO), is currently idle, but the segment is actively tendering for new FSO projects, particularly with regional oil producers. Given the rising demand for offshore storage solutions, a successful contract award could serve as a key earnings growth catalyst, adding a stable revenue stream and enhancing fleet utilization in the coming years.

 

Valuation & Recommendation. Avangaad is valued at RM0.44, derived from a 16.0x PER on FY26F EPS of 2.8 sen. The assigned PER is based on a 0.4x PEG ratio (60% discount on 1x), considering Avangaad’s smaller market capitalisation and a forecasted CAGR of 40% from FY24 to FY26F. We anticipate high earnings growth over the next two years, driven by the successful restructuring and management’s expansion initiatives.

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