COASTAL–Fundamental Analysis (28 Aug 2015)

COASTAL Analysis:-

Excel –

Notes –

My View:-

  • Valuation:
    • Absolute EY% Valuation:
      • Trailing:
        • FY14 (EPS: 0.367) – 3.358 (Uncertainty Risk: LOW)
        • R4Q (EPS: 0.361) – 3.307 (Uncertainty Risk: LOW)
      • Forward:
        • FY15 (EPS: 0.394 ± 5%) – From 3.431 to 3.792 (Uncertainty Risk: LOW)
        • FY16 (EPS: 0.338 ± 5%) – From 2.939 to 3.248 (Uncertainty Risk: LOW)
      • EPS applied to reach the current stock price (2): 0.218
  • 2Q15 net profit declined by 27.8% YoY to RM34.8m from RM48.2m in 2Q14 due to lower number of vessel deliveries of 3 units in the quarter vs. 6 units last year amid a weaker general OSV market. However, profitability of the group remained largely intact with its shipbuilding PBT margin at 20.2% in the quarter (20.5% in 2Q14). (Kenanga, 26 Aug 2015)
    • Sequentially, 2Q15 net profit weakened 47.2% QoQ due to lower shipbuilding revenue contribution caused by lower OSV vessel deliveries (3 units in the current quarter vs. 5 units in the previous quarter). This is despite improvement in Shipbuilding segment’s PBT margin to 20.2% from 18.8%, possibly driven by more favourable USD/MYR trend.
    • For 1H16, however, core net profit improved slightly by 3.4% YoY to RM100.7m from RM97.4m previously due to higher value of vessels sold in the period under review, driving 10.3% YoY growth in its top line. However, a slight drop in PBT margin to 19.6% from 21.2% partially due to weaker shipbuilding margins in 1Q15 offset the growth in revenue.
  • COASTAL is awaiting its 2nd high-specification jack-up rigs due for delivery in 2H15. If no contract is secured, the management will elect to dispose the rig pre-actual delivery to reduce their risk exposure.
  • 26 Aug 2015 – Excluding its 1st Jack Up rig sale earlier and RM1.3b Gas rig contract, the group’s orderbook stands at RM1.1b providing earnings visibility until 2017 amid current challenging market.
  • COASTAL is currently undervalued, but my main concern is its orderbook is not increase.

Latest Financial – Q2 2015 Financial Report (25 Aug 2015)

At the time of writing, I did not own shares of COASTAL.


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