Thursday 28 Mar 2024
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KUALA LUMPUR (Nov 25): Sabah-based offshore support vessels (OSV) fabricator Coastal Contracts Bhd's net profit fell 56.23% to RM23.75 million in the third quarter ended Sept 30, 2015 (3Q2015), despite a near quadrupling in its quarterly revenue, due to the writing down of inventories to net realisable value.

It recorded a net profit of RM54.3 million in last year's corresponding quarter, its filing on Bursa Malaysia today showed.

Its latest quarterly revenue came in at RM921.2 million, 3.96 times higher against RM232.4 million in 3QFY14, primarily due to the delivery of its first jack-up drilling rig to a major oil and gas (O&G) player for about RM841 million.

Meanwhile, its net profit for the nine months ended Sept 30 (9MFY15) fell 17.93% to RM124.49 million from RM151.68 million in 9MFY14, again due to the writing down of its inventories to their net realisable value.

Revenue, however, surged 105.32% to RM1.44 billion from RM699.48 million in 9MFY14.

Due to the current adverse market condition, the company said it has sold its first jack-up drilling rig to reduce the group's exposure to a potential prolonged downturn in the drilling market, while continuing to defend its solid position in the offshore O&G market.

"As anaemic performance in the drilling industry persists, the group will put on hold its plan to venture into the drilling industry in the near term until the recovery of oil price," it said.

In a separate statement, Coastal Contracts executive chairman Ng Chin Heng said the overall sector is currently witnessing slower orders for newbuild OSVs as O&G majors delayed plans for large capital expenditure.

"That said, our sizeable order book allows us to effectively weather the challenging environment. At the same time, we strive to increase our marketing efforts to secure more new OSV sales in existing and new markets.

"Additionally, the recurring income stream from the long-term charter of our Jack Up Gas Compression Service Unit (JUGCSU), which is targeted to commence in 2016, would also contribute towards enhancing our financial performance going forward," Ng said.

Coastal Contracts' order book stood at RM2.9 billion as at Sept 30. Of that, OSV and other vessels — due for delivery up to 2017 — amounted to RM1.3 billion.

The group's O&G division made up the remaining order of RM1.6 billion, comprising the fabrication and long-term charter of JUGCSU to Mexico's national oil company Petróleos Mexicanos.

Coastal Contracts shares closed four sen or 2.02% lower at RM1.94, valuing it at RM1.04 billion. Year to date, the counter had declined 31.45%.

(Notes: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

 

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