KUCHING: Coastal Contracts Bhd’s (Coastal Contracts) orderbook is poised to remain on its growth trajectory.
Following a corporate visit, AllianceDBS Research Sdn Bhd (AllianceDBS Research) in a report yesterday said the company has been tendering for jobs in the Southeast Asia market besides the sales of vessels to its customers.
The research firm believes that the company’s potential to secure more orders for the sales of vessels will enhance its orderbook further.
Yesterday, its shares dipped four sen or 1.31 per cent to close at RM3.02.
About 1.72 million shares were traded.
Additionally, AllianceDBS Research believes that a major catalyst for Coastal Contracts to enhance its near term earnings would be if the company secures a rig charter within the first quarter of 2015 (1Q15).
In the meantime, Coastal Contracts told Bursa Malaysia on Feb 23 that the company’s wholly-owned subsidiary Coastal Offshore (Labuan) Pte Ltd has secured contracts for the sales of two units of offshore support vessels (OSV) for an aggregate value of approximately RM197 million.
The company said both vessels were sold to its new customers in Mexico.
Coastal Contracts revealed that as of to date, the group’s orderbook is approximately RM2.81 billion with vessels sales orderbook constituted RM1.46 billion.
The company added that the balance of the orderbook comprised of RM1.35 billion is for the group’s first jack-up gas compression service unit (JUGCSU) charter contract for Mexico’s national oil corporation, Petroleos Mexicanos (Pemex).
Moreover, Coastal Contracts said those vessels are expected to be delivered in 2015 and 2017.
Thus, the company said the revenue stream from the sales of those vessels is expected to contribute positively to the top and bottomline performance of the group for the financial year ending Dec 31, 2015 and Dec 31, 2017.
Meanwhile, AllianceDBS Research forecast that with the sales of new vessels, the company has largely secured its financial year 2015 earnings.
Additionally, the research firm believes Mexico could potentially be the place that the company be awarded a contract for its maiden jack-up drilling rig which will be delivered this quarter.
Apart from that, the research firm also projected six months of chartering activity for the rig for into Coastal Contracts’ financial performance in FY15 which is expected to sustain the company’s earnings this year.
AllianceDBS Research maintains its bullish view on Coastal Contracts and has worked out a fair value of RM3.80 per share for the company’s share price.