KUALA LUMPUR (May 23): Coastal Contracts Bhd’s net profit jumped more than threefold to RM153.66 million for the third quarter ended March 31, 2023 (3QFY2023) against RM44.32 million in the previous corresponding period, mainly buoyed by higher share of profit of joint venture (JV) amounting to RM129.87 million.

This was on the back of higher interest income earned from loan granted to a JV and greater profit shared from its JV in the gas processing division.

The oil & gas (O&G) outfit’s revenue for the quarter under review rose 3.5% to RM55.74 million from RM53.84 million previously.

The vessel chartering division recorded a higher profit before tax margin of 15% or RM2.9 million in 3QFY2023 as compared with 4% or RM600,000 in 3QFY2022, attributed to lower overhead expenses incurred.

However, the shipbuilding and ship repair division reported a loss before tax of RM3.7 million in 3Q2023, compared to profit before tax of RM11.6 million recorded in 2Q2023.

The stellar 3QFY2023 performance also lifted nine-month net earnings to RM433.66 million from RM78.07 million, but it reported lower revenue of RM170.03 million compared with RM180.85 million previously.

Coastal Contracts expects the demand for natural gas to increase, driven by the development of industries and growth in electricity demand using natural gas as power generation source.

However, it is of the view that the offshore support vessel (OSV) market remains oversupplied but the market equilibrium has improved since FY2019, mainly owing to the gradual increase in upstream activities and increasing consensus that a large number of vessels which have been laid up during the downturn may not return to service due to high reactivation costs and the reluctance of oil companies to contract vessels which have been out of service for longer period.

“These circumstances may reduce some of the supply overhang and provide a good opportunity for our shipbuilding division in the next few years. While waiting for the recovery of the OSV market, Coastal Group has embarked on liftboat chartering with a long term plan to tap the wind farm renewable energy sector, which is currently the fastest growing energy source in the world.”

Coastal Contracts added that it continues to pursue new business that suits its growth strategies, such as floating production storage and offloading (FPSO), floating production unit (FPU), floating storage and offloading (FSO), floating storage and regasification unit (FSRU) and other O&G-related projects.

At market close, the stock was up six sen or 2.6% to RM2.35 for a market capitalisation of RM1.28 billion.