Yesterday, Coastal Contracts announced that its wholly-owned subsidiaries, Coastal Offshore (Labuan) Pte Ltd and Thaumas Marine Ltd, have collectively secured contracts for the sale of two units of Anchor Handling Tug Supply (AHTS) and one unit of Subsea Support Vessel (SSV) for an aggregate value of approximately RM111m.
OUR TAKE
More about the vessels. We understand that the SSV is designed to transport liquid cargo, store materials and equipment, move men and material between platforms, and facilitate general subsea support, maintenance, transport and standby. The SSV is sold to a new customer in United Arab Emirates whereas the two AHTS are sold to one of Coastal's loyal customers from Indonesia.
Positive news but no changes to our forecasts. This is because we had earlier factored in some orderbook replenishment for this company. We believe that the margins for the sale of the SSV may not be that lucrative as it is probably sold at a lower price in order to enter into a business relationship with a new customer.
New orders to boost orderbook to RM743m. This amount is expected to keep the company busy until the end of 2013, fully utilizing the company's yard. The new order is timely as it provides Coastal with a new business partner from the Middle East.
Maintain BUY. Our fair value for Coastal remains unchanged at RM2.44, based on the existing PE of 7x FY13 earnings. We will be visiting the management very soon to obtain a full update with regards to the company's prospects post 2013. Source: OSK
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