Coastal

Company Basics
Exchange Bursa Malaysia
Company Name Coastal Contracts
Stock Code 5071
Sectors
Paid Up Capital * MYR 70.56
Par Value - (as at 2008-12-31)
Market Cap * MYR 682.30 (based on value of 1.9300 per share)

Recent 52 wk low: Price 0.79 a share (Market cap MYR 279.3m)

Performance (as at 2008-12-31) *
Total Assets: MYR 862.32
Intangible Assets: MYR 5.88
Revenue: MYR 348.06
Earnings Before Interest and Taxes: MYR 98.10
EPS (Basic) Inc. Extraordinary Items: MYR 0.28
PE Inc. Extraordinary Items: 7.02
EPS (Basic) Exc. Extraordinary Items: MYR 0.28
PE Exc. Extraordinary Items: 7.02
Net Income: MYR 96.77
Dividends - Common/Ordinary: MYR 8.47
Dividends - Total: MYR 8.47
Goodwill: MYR 5.88
Minority Interest: -
Reserves: -
Return On Assets: 11.22%
Return On Equity: 31.42%
Shareholder's Equity: MYR 307.97


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2008...2007...2006

Assets
862.32...546.42...292.72
Liabilities
554.35...331.76...143.22
ROA
11.22%...12.69%...11.69%
ROE
31.42%...32.29%...22.89%
EPS
0.28...0.20...0.10
PE
7.02...9.65...18.85
Net Income Margin (%)
27.80...23.76...21.48
Operating Margin (%)
-
EBITD Margin (%)
30.29...25.51...25.83


Income Statement
Revenue - Total
348.06...291.76...159.29
Gross Profit (Loss)
-
Operating Income After Depreciation
98.10...69.44...35.75
Net Income (Loss) - Consolidated
96.77...69.32...34.22

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Recent 52 wk low: Price 0.79 a share (Market cap MYR 279.3m)

You could have bought the whole company for 279.3 million and earned 98.10 million for the year 2008! (PE of 2.82, P/B of 0.9). Yes, there remains the concern over its book orders in 2010 or the short run. However, over the long run, Coastal should do alright when the O&G sector improves. Its business and fundamentals have been good and at that very low price 0f MYR 0.79 a share, was probably a good investment: there is safety of capital with a potential for a positive reasonable return.

What led to the steep drop from MYR 2.38 to MYR 0.79? The severe economic depression, the Lehman crash and the worries over the future earnings of Coastal had led to investors to sell down causing the steep fall in the price of this stock. On the other hand, what led to the recent steep rise in the price of this stock? The answer lies in understanding the fundamentals of the business of this company and the Mr. Market phenomenon espounded by Benjamin Graham.

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Coastal share price continues to rise. It was sold down hugely during the last few months.

2008 was another record year for Coastal. It has achieved a 5 years compounded annual growth rate above 43%.

What of its prospects for the coming year? Here are some notes from its chairman in its annual report:

"We are determined to remain firm on fostering a strong balance sheet and sound credit rating."

"We will continue to, of which we did, augment our fleet by building and owning more sophisticated marine transportation vessels, including higher end OSV."

"We expect 10-15% reduction in global fuel exploration and production expenditure and hence the concomitant offshore services. In the short run, our performance will be backed by existing book order."

"....global oil moguls continue to move exploration into deeper sea ensured by higher demands for young and sophisticated OSV. Pressure are on ship owners to replace their fleet."

"Longer term, we believe the fundamentals for oil & gas services remain strong and the demand for OSV will gradually return."

"We expect 2009 to be another year of progress for the Group."

... sounds encouraging in this financial turmoil.