Friday, May 20, 2011

Coastal slips but cancellation of MoU with Ramunia minimal impact

KUALA LUMPUR: Shares of COASTAL CONTRACTS BHD [] fell in late afternoon on Friday, May 20 in line with a lacklustre market while analysts viewed the cancellation of the MoU with Ramunia Bhd would have minimal impact.

At 3.43pm, Coastal was down seven sen to RM3.57 with 371,000 shares done, off the intra-day high of RM3.65.

On Thursday, Ramunia said Coastal's unit Pleasant Engineering Sdn Bhd and Ramunia had both agreed not to proceed with the MoU signed on Jan 28, 2010 for the proposed collaboration to undertake tendering, bidding and fabrication in relation to structures for the O&G industry.

OSK Research said its fair value for Coastal remained unchanged at RM4.85 based on the existing price-to-earnings ratio (PER) of 8.0 times FY11 earnings.

'We continue to like Coastal for its strong delivery track record and we think its performance would be sustainable as it still has a strong orderbook of RM760 million which can keep the company busy over the next 12 months while it proceeds to enhance its shareholders' value by finding a business partner for the O&G opportunities,' it said.

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