Many shipowners in the offshore sector are struggling to stay afloat amid the market downturn, but a group of offshore support vessel (OSV) companies are defying the odds. They are capitalising on expansion and investment opportunities, which are generating strong profits despite the sector's overall bear market that is driven by excess ship capacity and cheap oil.

Among the winners that are emerging is Singapore-listed OSV builder Nam Cheong. It posted a 47% rise, to MYR302.2m (US$83.6m), in its full-year profits for 2014. Revenue increased by 53% to MYR1.9bn, thanks to the delivery of 24 vessels in 2014.

Nam Cheong CEO Leong Seng Keat said it has been resilient in many market downturns. He pointed out that the company had continued to achieve gross profit margins of 15-20% in 2007/08, when the financial crisis hit global markets.

"It is part of the supply and demand, boom-bust cycle. Nam Cheong always advocates the standardised design of vessels for the mass market. As a result, the company will be able to constantly provide the vessels to meet the demands of the market," Leong explained.

Nam Cheong is also well positioned in the shallow-water sector, and is therefore more sheltered than many of its peers from the effects of low oil prices. It has one of the largest OSV fleets east of the Suez Canal and has maintained close partnerships by operating in cabotage areas such as Malaysia.

The company frequently receives letters of authorisation from Malaysian authorities, making Nam Cheong the preferred partner in the region's OSV sector. This has given it an edge over competitors, as the company has long-term relationships with blue-chip customers such as Bumi Armada, Perdana Petroleum, Icon Offshore, and Sapura Kencana Petroleum.

"Cabotage areas have always been [a] good market for Nam Cheong. It is because Nam Cheong works on a model of steadily supplying to the demands of the market," Leong said.

Australian-listed OSV specialist MMA Offshore is also out-performing relative to the market downturn. As with Nam Cheong, it sees Malaysia as a key market for strong growth.

Formed from the merger of Mermaid Marine Australia and Jaya Holdings in June 2014, MMA recently revealed a 55.8% rise in its 1H14 net profit to AUD37.7m (US$29.4m) for the period from July to December. Earnings then increased 80% to AUD456.3m due to higher OSV fleet use.

"We already have an operating presence in Malaysia and we see this market as a natural area for further growth," said MMA Offshore COO David Ross. "Our strategy in this regard will be dictated by market conditions and dynamics within the area."

Despite its healthy cashflow, Ross stated that the company was "not in a hurry" for joint ventures and acquiring new assets other than MMA Offshore's own newbuilding programme.

The company has five newbuildings on track, two of which will begin a major contract with Japan's largest oil and gas exploration and production company, INPEX, in FY17.

Emphasising MMA Offshore's strategy of developing partnerships across regions, Ross noted that the company's vessel fleet and land assets "are well diversified across regions like southeast Asia, Australia, the Middle East and Africa".

In Australia, Ross said the construction outlook "remains unchanged" as major liquefied natural gas projects such as Ichthys, Wheatstone, and Prelude have already been sanctioned and are under way.

He cited a reduction in activity in the Gorgon natural gas project in Western Australia, as con-struction work on the project is more than 90% completed and has therefore limited the demand for land and services in the northern part of that region.

The company would like to expand outside Australia to secure construction projects, such as cabling and replacement work in other cabotage areas. Southeast Asia presents more options for growth, MMA Offshore noted.

One example is Myanmar, where the company already has a foothold and where several of its vessels are already operating.