PETALING JAYA: Coastal Contracts Bhd
’s earnings are expected to be supported by engineering, procurement and construction (EPC) projects undertaken through its Mexican joint venture and upcoming vessel deliveries, says TA Research.
Coastal Contracts holds a 50% stake in Mexican joint venture Coastoil Dynamic SA de CV, through which it provides integrated oil and gas infrastructure, natural gas recovery, conditioning, and processing services in Mexico.
In a report, TA Research said the Coastoil’s EPC works for the second Papan onshore gas processing plant and a gas separation plant in Mexico’s Ixachi Field would be key earnings drivers over the “medium term”.
According to TA Research, the second Papan plant remained on track, with construction progress reaching 40% as of June.
“On-site activities and long-lead equipment procurement are underway, with commercial operations targeted for the first quarter ending March 31, 2027 (1Q27) for the 150 million standard cubic ft per day (mmscfd) facility,” it said.
Upon completion, the plant is expected to operate under a nine-year operations and maintenance (O&M) contract, with net profit margins of between 20% and 25%, based on management’s guidance.
It added Coastoil has commenced work on the US$170mil EPC contract for the plant’s permanent infrastructure in 2Q26, with completion targeted for 1Q27.
“The contract was awarded by Mexico’s state-owned oil company Petróleos Mexicanos (Pemex), with revenue to be recognised upon project completion and acceptance by Pemex,” it said.
Separately, TA Research said the US$461.3mil EPC contract for a gas separation plant has moved into execution, with Pemex issuing the first work order for Phase 1 in August 2026. Based on management’s guidance of an EPC margin of about 20%, TA Research expects revenue and earnings from the project to be recognised across Coastal Contract’s financial year 2027 (FY27) and FY28, providing an earnings growth driver over the medium term.
At group level, TA Research said Coastal Contracts’ vessel construction programme provides earnings visibility from the second half of FY26, with at least three vessels scheduled for delivery in 3Q26 and 4Q26.
“The group is currently constructing three 40-metre unmanned surface vessels and three 85-metre subsea support and maintenance vessels, with the vessels expected to be completed between 1Q27 to 1Q28,” it said.
“Management noted that purchase commitments are typically secured three to six months ahead of vessel completion, providing reasonable visibility for future monetisation.”
