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SANDAKAN: With Sabah set to become Malaysia's oil and gas hub, particularly in deep-water oilfield developments off the state's west coast, Coastal Contracts Bhd is actively pursuing strategic opportunities to diversify into other oil and gas-related business, such as offshore structure fabrication business, floating storage and offloading and floating production, storage and offloading.
Recently, one of the group's yards in Sandakan, measuring 52 acres, had been upgraded and it is now capable of erecting offshore structures and the group is looking forward to tap into this potential new phase of growth via collaboration with strategic partners that complement the group's technical capabilities in the fabrication business.
Executive chairman Ng Chin Heng said despite the global economic slowdown, the group managed to clinch its third major vessel sales order amounting to RM111mil in relatively quick succession, following its major deal of RM141mil in August.
“This is mainly attributable to the Coastal group's appropriate marketing strategy, as well as great effort contributed by its marketing team,” Ng told StarBizWeek.
The latest contract has brought the total of RM743mil worth of vessel orders awaiting delivery to customers up to 2013.
Ng said although earnings in the first half had been hampered by lower number of vessels delivered, he nevertheless added that shipbuilding revenue stream for the financial year ending Dec 31, 2012 (FY12) could be comparable with FY11.
However, Ng cautioned that that would happen barring any unforeseen factors which might result in late delivery of vessels or cancellation of sales
contract, and also any adverse changes in the US dollar-ringgit exchange rate.
The group posted a lower net profit of RM190.64mil in FY11 compared with RM200.79mil in FY10. However, revenue was up 6.5% at RM719.13mil from RM675.05mil in 2010.
“We are lucky that so far Coastal has not encountered any substantial cost over-runs since its public listing in August 2003,” he added.
In view of the continued uncertainty in the eurozone and an expected slowdown in global economic growth, the management hoped the group's revenue stream for FY13 would remain stable, Ng said, adding: “There should be no major breakthrough for the group's revenue for FY13 unless it
managed to secure big ticket oil and gas upstream projects.”
Coastal was established in 1976 by a local merchant in Sabah as a shipping company, operating merely a few used tugs and barges for commodities transportation within the Borneo region.
In 1982, when Ng, then a rubber trader, took over Coastal in the midst of the 1980s crisis and ran the business together with his wife and brothers with no knowledge of the business, little did they know that their fledging business would develop into one of the region's most prevalent marine and offshore support services provider.
Today, listed on the Main Market of Bursa Malaysia Securities Bhd, Coastal operates shipyards of over 90 acres and has built and delivered a diverse fleet of more than 330 units of conventional tugs, barges, landing crafts and offshore support vessels to worldwide customers.
Coastal has the prestigious honour of being featured in Forbes Asia's list of 200 Best Under a Billion for six years running (2006 to 2011). The annual list picked 200 top-performing publicly-traded corporations in Asia Pacific (with annual revenue between US$5mil and US$1bil) based on earnings growth, sales growth and return on equity over three years.