Coastal plans to diversify

Saturday October 27, 2012

By PHILIP CHOO
pchoo@thestar.com.my

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.

http://biz.thestar.com.my/news/story.asp?file=/2012/10/27/business/12233923&sec=business

Coastal - Return on Retained Earnings

Coastal
Year		DPS		EPS		Retained EPS
2002
2003		0		3	a	3
2004		0.9		3.1		2.2
2005		0.6		3.5		2.9
2006		0.7		7.5		6.8
2007		1.4		14.6		13.2
2008		2.6		20.3		17.7
2009		2.2		33.2		31
2010		3.7		41		37.3
2011		8.3		39.5	b(P)	31.2
2012
Total		20.4	c	165.7	d	145.3e
From	2003	to	2011
EPS increase (sen)			b-a	36.5
DPO			c/d	12%
Return on retained earnings			(b-a)/e	25%
(Figures are in sens)

Investor's Checklist: Industrial Materials

This is a very traditional Old Economy sector, with many hard assets and high fixed costs.

Industrial materials are divided into commodity producers (steel, chemicals) and producers of noncommodity value-added goods and services (machinery, some specialty chemicals).

Buyers of commodities choose their produce on price - otherwise, commodities are the same product, regardless of who makes them.

The sales and profits of companies in this sector are very sensitive to the business cycle.

Very few industrial materials companies have any competitive advantages; the exceptions are those in concentrated industries (e.g., defense), those with a specialized niche product (e.g., Alcoa, some chemicals makers), and, above all, those that can produce their goods at the lowest cost (e.g., Nucor).

Only the most efficient producers will survive the downturn:  The best bet is to be the low-cost producer and owe little debt.

Asset turnover (total asset turnover [TATO] and fixed asset turnover [FATO] measure a manufacturing firm's efficiency.

Watch out for industrial firms with too much debt, large underfunded pension plans, and big acquisitions that distract management.


Ref:  The Five Rules for Successful Stock Investing by Pat Dorsey



Read also:
Investor's Checklist: A Guided Tour of the Market...

Coastal

Coastal versus Dutch Lady (A Comparative Study)

	3.4.2012		5.3.2012
	Coastal		Dutch Lady
Income Statement
	31/12/2011		31/12/2011
	RM (m)		RM (m)
Revenue	719.31		810.65
Gross Profit	196.67		304.47
Operating Profit	-		139.372
Financing costs	-0.519		-0.919
PBT	191.636		141.553
PAT	190.954		108.082
EPS (basic) sen	39.51		168.88
EPS (diluted) sen
Balance Sheet
NCA	98.487		74.048
CA	1042.326		324.465
Total Assets	1140.813		398.513
Total Equity	770.798		259.154
NCL	16.936		4.051
CL	353.079		135.308
Total Liabilities	370.015		139.359
Total Eq + Liab	1140.813		398.513
Net assets per share	1.595		4.05
Cash & Eq	150		193.143
LT Borrowings	11.414		0
ST Borrowings	4.089		0
Net Cash	134.497		193.143
Inventories	819.277		93.448
Trade & other receivables	72.347		36.713
Trade & other payables	348.967		121.831
Quick Ratio	0.63		1.71
Current Ratio	2.95		2.40
Cash flow statement
PBT	191.636		141.553
OPBCWC	194.058
Cash from Operations	61.380		188.290
Net CFO	59.471		161.940
CFI	14.510		-7.135
CFF	-75.736		-47.319
Capex	-16.547		-10.882
FCF	42.924		151.058
Dividends paid	-40.231		-46.400
DPS (sen)	8.33		72.5
No of ord shares (m)
basic	483.229		64
diluted
Financial Ratios
Gross Profit Margin	27.34%		37.56%
Net Profit Margin	26.55%		13.33%
Asset Turnover	0.63		2.03
Financial Leverage	1.48		1.54
ROA	16.74%		27.12%
ROC	30.01%		163.73%
ROE	24.77%		41.71%
Valuation	3.4.2012		5.3.2012
Price	2.02		29.5
Market cap (m)	976.12		1888.00
P/E	5.11		17.47
P/BV	1.27		7.29
P/FCF	22.74		12.50
P/Div	24.26		40.69
DPO ratio	0.21		0.43
EY	19.56%		5.72%
FCF/P	4.40%		8.00%
DY	4.12%		2.46%

Petronas finds "significant" oil off Malaysia's Sabah

Tue Nov 15, 2011 3:56am EST

* Reserves of 227 mln boe, oil output rate of 8,200 bpd

* Estimated reserves have upside potential - Petronas

* Sabah has 12 pct Malaysia's gas reserves, 25 pct of oil-analyst 

By Min Hun Fong

KUALA LUMPUR, Nov 15 (Reuters) - Malaysia's Petronas discovered oil offshore Sabah in the latest "significant" find this year in the hydrocarbon-rich state on Borneo island, as the national oil company sets to boost reserves and output amid easing production costs.

Initial estimates put the well's reserves at 227 million barrels of oil equivalent (boe) and tests in three different reservoirs yielded a maximum output rate of 8,200 barrels per day (bpd), Petroliam Nasional Bhd (Petronas) said on Tuesday.

Petronas' exploration and production arm, Petronas Carigali Sdn Bhd, is the sole equity holder of the production-sharing contract (PSC) for the block. Wakid-1 is the second well drilled in the block. The first, Tambuku-1, yielded only minor gas discovery, Petronas said in a statement.

"Petronas Carigali plans to further appraise the discovery in the near future," it said, adding that the estimated reserves have upside potential.

The oil find comes four months after Petronas said it has discovered significant gas in the shallow waters off the coast of Borneo island.

Sabah has about 11 trillion cubic feet (tcf) of gas and 1.5 billion barrels of oil in its reserves, representing about 12 percent and 25 percent of Malaysia's gas and oil reserves respectively, said FACTS Global Energy analyst H.S. Yen.

Subramanya Bettadapura, Director of Energy & Power Systems at consultancy Frost & Sullivan Asia Pacific, said the East Malaysian state has potential gas reserves of 10 tcf and oil reserves of 2 billion barrels on a conservative estimate.

"The new discoveries indicate that there's a lot more oil out there," said Yen. "Since Petronas has a stake in all fields either through total equity (in the case of Wakid-1) or through its cemented position in all Malaysian PSCs, any oil/gas discovery is good for Petronas."

Crude oil output in Southeast Asia's second-biggest oil and gas producer is seen rising 3.3 percent next year, reversing a decline in 2011, and liquefied natural gas production may rise, the government said last month.

Oil production is expected to recover to 620,000 bpd, after an estimated 6 percent drop this year to 600,000 bpd, extending a 3.1 percent fall in 2010, it said.

SEEKING BEST RETURNS

Shamsul Azhar Abbas, who became Petronas chief executive last year, has led the producer to rejuvenate domestic fields and drill in deeper waters at home, while seeking to "high grade" its global operations by acquiring more valuable assets in Asia, West Africa and South America and exiting from less profitable ventures such as Algeria.

"Petronas is putting capital where they can get better returns for the risk involved," said Andrew Wong, associate director at Standard & Poor's in Singapore. "It recognises that certain areas such as the Middle East and North Africa are a bit more volatile and present higher risks."

Last week, Royal Dutch Shell and Petronas agreed to bolster output at fields off Sarawak and Sabah, as Malaysia works on coaxing more oil out of matured wells to stem a natural decline via projects that may lead to an additional 90,000 to 100,000 bpd of crude.

The development of the existing fields of Baram Delta off Sarawak and North Sabah using enhanced oil recovery technology will increase the nation's reserves just as drilling costs taper off amid a global economic slowdown while oil prices stay high.

U.S. crude is up 7.1 percent this year, poised for a third year of gains after climbing 15 percent in 2010 and 78 percent in 2009.

"Petronas is developing Labuan and Sabah region as the deepwater regional hub," said Bettadapura of Frost & Sullivan.

"As many as seven deepwater fields are being developed around this region. The Sabah-Sarawak Pipeline and the Sabah Oil & Gas Terminal are major investments in the region to exploit the hydrocarbon reserves in Sabah." (Additional reporting by Jane Lee and Florence Tan in SINGAPORE; Editing by Ramthan Hussain)

http://www.reuters.com/article/2011/11/15/petronas-idUSL3E7MF0GF20111115

Coastal Contracts Berhad

Company Name	:	COASTAL CONTRACTS BHD
Stock Name	:	COASTAL
Date Announced	:	24/11/2011

Financial Year End	:	31/12/2011
Quarter	:	3
Quarterly report for the financial period ended	:	30/09/2011
The figures	:	have not been audited

Converted attachment :

Please attach the full Quarterly Report here:

Coastal 3rd Quarter 2011.pdf

Remark:

Currency	:	Malaysian Ringgit (MYR)

SUMMARY OF KEY FINANCIAL INFORMATION

30/09/2011

		INDIVIDUAL PERIOD		CUMULATIVE PERIOD
		CURRENT YEAR QUARTER	PRECEDING YEAR CORRESPONDING QUARTER	CURRENT YEAR TO DATE	PRECEDING YEAR CORRESPONDING PERIOD
		30/09/2011	30/09/2010	30/09/2011	30/09/2010
		$$'000	$$'000	$$'000	$$'000
1	Revenue	110,211	192,091	499,890	471,852
2	Profit/(loss) before tax	36,560	53,601	139,508	145,205
3	Profit/(loss) for the period	36,657	53,634	139,360	145,215
4	Profit/(loss) attributable to ordinary equity holders of the parent	36,657	53,634	139,360	145,215
5	Basic earnings/(loss) per share (Subunit)	7.59	11.10	28.84	30.05
6	Proposed/Declared dividend per share (Subunit)	4.20	0.00	9.70	5.00
		AS AT END OF CURRENT QUARTER		AS AT PRECEDING FINANCIAL YEAR END
7	Net assets per share attributable to ordinary equity holders of the parent ($$)	1.4917		1.6627

Remarks :

Basic earnings per share for individual quarter for preceding year corresponding quarter of 11.10 sen and cumulative quarter for preceding year corresponding period of 30.05 sen have been restated for the effects of 1:3 bonus issue on 18 July 2011.

9 Months ended 30.09.2011 Income Statement Revenue 499.890m Gross profit 139.847m PBT 139.508m PAT 139.360M EPS Basic 28.84 sen Diluted N/A Finance costs (0.484m) Income Tax expense (0.148m) Bonus issue: 1:3 bonus issue on 18 July 2011. Balance Sheet ASSETS NCL 100.970m CA 1,015.196m TOTAL ASSETS 1,116.166m EQUITY AND LIABILITIES Total equity 720.911m NCL  17.138m CL 378.117m TOTAL LIABILITIES  395.255m TOTAL EQUITY AND LIABILITIES 1,116.166m Net assets per share RM 1.4917  Inventories 743.153m Trade receivables 15.712m Other receivables 59.045m Trade payables 4.207m Other payables 369.819m Cash and bank balances 196.749m LT Borrowings 12.251m ST Borrowings 4.070m Dividends 30.9.2011 (20.296M) 30.9.2010 ( 99.424M) Cash flow statement Net cash generated from operating activities  103.427m Net cash generated from investing activities  13.208m Net cash used in financing activities (74.919m) Weighted average number of ordinary shares in issue 483.266m. For diluted earnings per share calculations, the weighted average number of ordinary shares in issue is adjusted to assume that the maximum number of new ordinary shares have been issued pursuant to the share options granted under the warrants ("Warrants").  The dilutive portion of the ordinary shares deemed issued pursuant to the /Warrants are accounted for in the diluted earnings per share calculation.  The Warrant has a dilutive effect only when the average price of ordinary shares of the Company during the period exceeds the exercise price of the options granted.  As the average market price of ordinary shares during the period (RM 2.78) is lower than the exercise price of the options (RM 3.18), the options were not assumed to be exercised because they were anti-dilutive in the period. Market Watch Recent Financial Results Announcement Date Financial Yr. End Qtr Period End Revenue RM '000 Profit/Lost RM'000 EPS Amended 24-Nov-11 31-Dec-11 3 30-Sep-11 110,211 36,657 7.59 - 23-Aug-11 31-Dec-11 2 30-Jun-11 233,849 46,611 9.651# - 27-May-11 31-Dec-11 1 31-Mar-11 155,830 56,092 11.614# - 23-Feb-11 31-Dec-10 4 31-Dec-10 203,403 55,663 11.525# - # Adjusted Bonus issue:  1:3 bonus issue on 18 July 2011. ttm-EPS  40.38 sen Price RM 1.85 Trailing PE  4.6x Share Price Performance    High Low Prices 1 Month 2.040   (15-Nov-11) 1.770   (10-Nov-11) Prices 3 Months 2.130   (07-Sep-11) 1.620   (26-Sep-11) Prices 12 Months 3.820   (25-Apr-11) 1.620   (26-Sep-11) Volume 12 Months 65,994   (05-Apr-11) 330   (01-Dec-10) 23.11.2011 Price RM 1.950 PE 4.14x DY 3.21% Market Capitalisation 942.4m ROE 27%