Thursday, February 10, 2011

OSK Research maintains Buy on Coastal Contracts, TP unch RM4.41

KUALA LUMPUR: OSK Research is maintaining its Buy call on COASTAL CONTRACTS BHD [] with an unchanged target price of RM4.41, based on the existing PER of 8.0 times FY11 earnings.

'Despite being only a shipbuilder, we continue to like Coastal for its strong delivery track record,' it said on'' Thursday, Oct 10.

On Wednesday, Coastal announced that its units had collectively secured contracts for the sale of seven offshore support vessels; ii) three tug boats, and iii) two oil barges.

OSK Research said it came to understand the seven offshore support vessels are Anchor Handling Tug and Supply vessels (AHTS). The new contracts are worth a total of RM268 million.

'With this contract on board, we believe that Coastal's orderbook should keep the company busy for at least for the next 12 months. Nevertheless, we think that this may mark the start of more newbuild contract awards, especially for offshore support vessels.

'Hence we expect more to follow given the increase in O&G activities in the region. Also, newbuilds are required as most of Coastal's customers would need to replace their vessels after having put off ordering new ones in the past two years,' it said.

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