KUALA LUMPUR (April 7): Orkim Bhd (KL:ORKIM) is expected to deliver steady earnings growth as the petroleum products shipping company expands its fleet to cater to growing demand, BIMB Securities said.

Daily charter rates are expected to rise 2.1% annually over the next three years from renewal of existing contracts and new charter agreements, the research house said in its initiation note on Orkim with a ‘buy’ call and target price of RM1.05. The note also marks its first ever analyst coverage since listing four months ago.

“Orkim’s earnings visibility is underpinned by long-term contracts of up to 10 years with extension options, structured across time charters, consecutive voyage charters, and contracts of affreightment,” BIMB Securities said.

All in all, Orkim is expected to make net profit of RM84.7 for 2026 before growing to RM90.9 million next year, according to the house’s projections.

Shares of Orkim have declined about 10% in value since the outbreak of the Iran war in March to 95.5 sen on Tuesday, but remained above its initial public offering price of 92 sen. At the last price, the company has a market capitalisation of RM955 million.

Backed by state-owned private equity firm Ekuiti Nasional Bhd (Ekuinas), Orkim currently operates 19 vessels transporting clean petroleum products including gasoline and diesel as well as liquefied petroleum gas such as propane and butane mostly used as cooking gas.

Orkim has another four new-build vessels in construction until 2027. The company has time charters worth RM596.3 million left in its books at the end of March, equivalent to nearly five times the revenue from such contracts in 2025.

“We view this contract-backed model enables Orkim to mitigate the volatility associated with non-recurring sources like spot charters and shipbroking fees while underpinning stable cash flows, improving financing access, and enabling disciplined capital allocation,” BIMB Securities said.

Coupled with consecutive voyage charters and contracts of affreightment on hand, the overall contract coverage remains robust, supporting consistently high fleet utilisation and reducing reliance on more volatile spot exposure, the house added.

BIMB Securities’ target price pegs the company at about seven times its enterprise value, a 20% discount to the valuation of the much-larger MISC Bhd (KL:MISC), which the house said is reasonable.

“We view MISC more as a broad sector proxy rather than a direct comparable,” the house noted.

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