Pacific Radiance’s Revival On Track: Charting the Offshore Sector’s Resurgence

Phillip Securities Research (Singapore) | March 17, 2025
The offshore services provider Pacific Radiance Ltd. is navigating a steady recovery, as evidenced by its 2H24 results. The company’s turnaround efforts are bearing fruit, with a significant improvement in its adjusted PATMI during the second half of the year.

A Multifaceted Resurgence

Pacific Radiance’s 2H24 revenue jumped 64% year-over-year to S$24.8 million, driven by charter income from its new workboat and anchor handling tug supply (AHTS) vessel. However, gross profit grew at a more modest 8% to S$7.9 million due to additional costs associated with the deployment of the company’s accommodation barge.

Strengthening Across Divisions

Shipyard revenue grew 48% year-over-year in 2H24, supported by an increased number of vessels undergoing repairs and maintenance. The company’s faster turnaround time has attracted more OSVs (Offshore Support Vessels) to its shipyard.
The ship management division saw a 75.3% year-over-year increase in revenue, benefiting from the charter income generated by the new workboat and AHTS.
Pacific Radiance’s Indonesian associate, Logindo, has returned to profitability by deploying its vessels in higher-charter-rate territories, contributing a S$5.5 million writeback in 2H24.

Navigating Margin Challenges

While the top-line growth was impressive, Pacific Radiance’s gross margins in 2H24 came in at 32.1%, lower than the 48.6% recorded in the same period the previous year. This was due to additional costs incurred for the deployment of the accommodation barge, which secured a US$31.6 million charter contract in the Middle East. However, the charter rates for the company’s three new vessels remained stable.

Outlook: Visibility in the Earnings Recovery

Pacific Radiance’s earnings recovery has good visibility, with the three new vessels (workboat, AHTS, and accommodation barge) expected to contribute significantly to growth in FY25. The accommodation barge, which was only deployed in November 2024, is anticipated to be the biggest contributor.
Additionally, the completion and sale of two crew transfer vehicles (CTVs) in 2H25 are expected to provide a further boost to earnings. The company’s stronger balance sheet, with a net cash position of S$17.8 million, positions it well to expand its fleet size, potentially with the support of financial partners.

Maintaining the BUY Recommendation

Phillip Securities Research maintains its BUY recommendation on Pacific Radiance, with an unchanged target price of S$0.06. The target price is pegged to the industry average of 8x PE on the company’s FY25 earnings forecast.
The key drivers for the turnaround include:
Full-year earnings contribution from the three new vessels
Completion and sale of two CTVs
Turnaround in associate Logindo
Growth in ship repair revenue
Overall, Pacific Radiance’s revival is on track, and the company is well-positioned to capitalize on the ongoing recovery in the offshore services sector.