PRM – Entering an earnings-harvesting phase

We maintain a positive view on PRM, supported by a recovery in PCT earnings from 3Q26, driven by fuel cost pass-through, higher chemical tanker utilization, and fleet modernization. FSU remains the key near-term earnings contributor with full utilization expected through 2H26, while OSV continues to be the main long-term growth engine. Fleet expansion from 70 vessels to 78 vessels by mid-2027 supports earnings growth as PRM transitions into an earnings-harvesting phase. We maintain our 2026 core profit forecast of Bt2.3bn and TP of Bt11.40, supported by an attractive 6-7% dividend yield.

PCT recovery and stable core earnings support near-term growth. PRM's earnings outlook remains positive, supported by improving performance across key segments. PCT earnings are expected to recover from 3Q26 as higher bunker costs are passed through under cost-plus contracts, chemical tanker utilization increases, and fleet modernization supports stronger freight rates. The company is also expanding its chemical transportation business to enhance long-term growth. Meanwhile, COC continues to generate stable recurring earnings under long-term contracts, with all three VLCCs operating normally despite recent supply route disruptions.

FSU and OSV remain key pillars of earnings growth. FSU remains PRM's strongest near-term earnings contributor, with all five vessels expected to maintain 100% utilization through 2H26, supported by strong storage demand and improving contract visibility. OSV continues to serve as the primary long-term growth engine, driven by rising offshore activity and expansion into Myanmar, Vietnam, and the Middle East. PRM has expanded its OSV fleet significantly and expects further earnings growth from sustained utilization, stronger margins, and OSV expansion.

Fleet expansion supports transition to earnings-harvesting phase. Fleet growth remains a key earnings driver, with total fleet size projected to increase from 70 vessels in early 2026 to 78 vessels by mid-2027. Growth will be supported by six new domestic tanker deliveries, additional chemical tankers, and selective OSV expansion. With only Bt2bn of new 2026 investment commitments, PRM is transitioning into an earnings-harvesting phase. Strong operating cash flow, a D/E ratio of 0.8x, and lower finance costs support growth and shareholder returns, with 2026 dividends expected to exceed 2025 levels.

2026 earnings forecast maintained. PRM reported 1H26 core profit growth of 9% YoY, compared with 19.7% YoY growth in our full-year forecast. The slower earnings growth was primarily due to a lag in passing through higher fuel costs in the PCT business following fleet adjustments. We expect this to be offset in 2H26 by fuel cost pass-through under existing contracts and higher utilization in the FSU business. We therefore maintain our full-year core profit forecast of Bt2.3bn. We also expect an additional interim dividend announcement in the near term.

Maintain positive outlook and TP of Bt11.40. We remain constructive on PRM, supported by stronger FSU utilization, resilient tanker demand, and ongoing fleet expansion. Our TP of Bt11.40 is based on an EV/EBITDA multiple of 5.4x (-0.5SD). We view the expected dividend yield of 6-7% over the next three years as attractive and supportive of shareholder returns.

Key risks include weaker oil demand affecting tanker and offshore services, oil price volatility, changes in international maritime regulations, and FX volatility. ESG risks include emissions and potential ecosystem impacts from offshore operations.