Coastal Contracts earnings within expectations
PETALING JAYA: Integrated oil and gas services and energy infrastructure solutions provider Coastal Contracts Bhd posted a nine-month to Sept 30, 2025 (9M25) core profit of RM56.7mil that was within expectations – at 71% of TA Research, and consensus’ full-year forecasts.
TA Research said, in a note to its clients, it was maintaining its target price of RM2.04 per share based on sum-of-parts valuation for the Coastal stock.
At press time, it was RM1.17 a share.
On the company’s outlook, the research house noted that from the major collections from the Mexican joint venture, Coastoil Dynamic SA De CV and proceeds from the sale of two offshore support vessels (OSVs), the company holds a robust balance sheet with RM939mil in cash and cash equivalents.
The majority of the cash is currently placed in short-term investments such as money market funds.
This financial position provides flexibility to pursue key growth initiatives, it said.
The research house also said the shipbuilding division is poised for expansion, supported by an order book comprising three utility support vessels under construction – two slated for delivery in the second half of this year and one in the first half of next year (1H26) – as well as three high-end OSVs in the pipeline, scheduled for staggered deliveries between 1H26 and 1H27.
TA Research also noted that Coastal Contracts is in discussions with luxury hotel operators to manage its Pulau Mabul resort, where phase one capital expenditure is estimated at around RM85mil, with room rates targeted above US$500 per night.
As phase one is expected to take one-to-two years to complete and discussions remain ongoing, contributions from the hospitality segment are only anticipated from financial year ending Dec 31, 2026 or FY26 onwards, the research house pointed out.
TA Research noted in the group’s most recent financial performance, its “others division (non-core operating activities)” profit before tax (PBT) had turned positive at RM7.1mil (from a loss before tax of RM34.8mil in the third quarter of FY24), mainly supported by fair value gains and investment income.
The losses in the preceding quarter were primarily due to unrealised foreign exchange losses on US dollar- denominated investments and bank balances amid the ringgit strengthening, it noted.
It said its vessel chartering segment saw revenue falling marginally by 2% quarter-on-quarter due to slightly fewer chartering days. Accordingly, PBT also slipped marginally by 2.6% to RM6.5mil from RM6.6mil within that segment.