Coastal: Bottom-line continued to rise

Result Update
Coastal's net profit increased by13% q-o-q or 37% y-o-y to RM54million while revenue was mixed- down 4% q-o-q but rose 19% y-o-y to RM232 million. The increased bottom-line was attributed to higher margin derived from the sale of vessels by Shipbuilding Division.


Table 1: Coastal's last 8 quarterly results


Chart 1: Coastal's last 41 quarterly results 

Valuation

Coastal (closed at RM3.46 last Friday) is now trading at a PE of 8.8 times (based on last 4 quarters' EPS of 39.5 sen). While Coastal's PE appears reasonably priced, its earning may be affected if the current crude oil prices continue to slide. This could lead to a slowdown in the O&G sector in general, which would affect the prospect of Coastal going forward.

Technical Outlook

Coastal is in an uptrend, with immediate support at RM3.50 & then at RM3.00.


Chart 2: Coastal's weekly chart as at Nov 21, 2014 (Source: Share Investor)

Conclusion

Based on satisfactory financial performance, fair valuation & positive technical outlook, Coastal is rated a HOLD. However its prospect and earning could be affected negatively if crude oil prices continue to weaken.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Coastal.