PETALING JAYA: Coastal Contracts Bhd
’s latest sale of an offshore support vessel (OSV) further strengthens earnings visibility for its shipbuilding division, with around three vessels expected to be delivered to customers in the financial year 2026 (FY26).
TA Research said it viewed the announcement as broadly in line with expectations, given that the vessel forms part of Coastal’s ongoing shipbuilding programme.
“Based on our assumptions of historical margins and the contract value, we estimate a about 20% net core profit margin, implying an earnings contribution of approximately RM35.2mil to FY26 net profit,” the research house said yesterday.
Coastal secured an order on Aug 14 for the sale of an OSV valued at RM175.8mil.
The vessel is scheduled for delivery in the fourth quarter of FY26, with construction costs recognised progressively upon delivery and revenue and margin recognised upon the transfer of risks and rewards to the buyer, in line with the group’s accounting policy.
“Looking ahead, we remain constructive on the group’s earnings trajectory for FY27, underpinned by the scheduled delivery of two high-specification OSVs in 2027, which should provide continued earnings support from the shipbuilding division.”
The latest shipbuilding contract brings Coastal’s new job wins to 121% of TA Research’s FY26 assumption of RM300mil, (including two vessel sales awarded on Dec 2, 2025, that are expected to be recognised in the second half of financial year 2026.
As such, the research house raised its FY26 to FY28 new shipbuilding job-win assumption to RM400mil, RM350mil and RM170mil, respectively.
This translates into 8.6%, 1.7% and 1.4% upward revisions to TA Research’s FY26 to FY28 earnings forecasts.
TA Research maintained its “buy” call for Coastal with a higher TP of RM2.15 a share (previously RM2.12 a share) based on sum-of-parts valuation.
