PETALING JAYA: Coastal Contracts Bhd
’s latest announcement of its Mexican joint venture (JV) company, together with its partners, to address the urgent gas flaring issues at the Ixachi Field in Mexico, is positive for the shipbuilding company, as it enhances revenue visibility for the company, among others.
Coastal Contracts announced on Monday that a consortium comprising its Mexican joint venture company, Coastoil Dynamic SA de CV, Sistemas Integrales de Compresión SA de CV and Nuvoil SA de CV had received an emergency work instruction (EWI) from Petroleos Mexicanos (Pemex), the Mexican state-owned petroleum company.
TA Research in a note said the announcement did not come entirely as a surprise, as Coastal Contracts had previously guided on ongoing engagement with Pemex relating to additional gas processing capacity at Ixachi.
“The project is strategically positive as it reinforces the company’s relationship with Pemex and validates Coastoil Dynamic SA de CV’s execution capability.
“While key terms are still pending, early work commencement improves revenue visibility and supports contract regularisation by March 2026.
“Execution and cost risks remain but are typical for engineering, procurement and construction projects and appear manageable,” it added.
The EWI was issued under Pemex’s emergency exception process to address urgent gas flaring issues.
While work has already commenced, commercial terms such as contract value and duration are still under negotiation, with formal contract execution targeted by March 2026.
Although starting work ahead of contract finalisation could be perceived as a risk, the research house said it believes this is mitigated by Pemex’s emergency exception framework and the company’s long-standing operating history with the Mexican state oil company.
In the absence of disclosed contract value and tenure, the research house said it has left its forecasts unchanged.
“We continue to assume a modest earnings uplift from financial year 2026 (FY26), with a stronger contribution in FY27 as construction ramps up,” it noted.
The research house is maintaining its “buy” stance as well as maintaining its target price of RM2.21 per share for the stock based on sum-of-parts valuation.
