Why Coastal Contracts is a Good Buy?

I am so proud to present to you the first guest post by a philantrophist tycoon, Mr. Koon Yew Yin. You can read more about him on this introduction by Dali (a very famous local investment blogger)

Many of my friends ask me how I can make so much money to give away for charity. After my retirement from IJM Corporation more than 20 years ago, I have been reading books by investment gurus like Benjamin Graham, Peter Lynch etc and learned how to make money from the stock market. Initially I have made some mistakes but gradually I improved. Almost all my profit comes from the stock market investment.
Statistics show that investment in the stock market is the best form provided you know how. Moreover, all the profit is tax free.

You may like to read about Coastal Contracts which I have been buying in the last several months and this stock forms a major portion of my investment portfolio.

I am not asking you to buy but if you decide to buy, you are buying it at your own risk.

The most important criterion for buying any share is its profit growth prospect. Never buy any share which cannot make increasing profit in the next few quarters. To make profit you must always remember not to buy when the share price has gone up above the P/E ratio of that particular sector, unless it has superior qualities.

The reasons for buying Coastal Contracts are as follows:
1. It has an excellent track record of making increasing profits in the last few years. Its revenue and EPS for FY 08, FY 09 and FY10 were 347million, 27 cents; 466m,46c and 672m,56cents.

2. For the fourth consecutive year, Coastal was awarded Forbes’ “Asia 200 Best Under a Billion” in 2007, 2008, 2009 and again in 2010. I do not know of any other Malaysian listed company that has this achievement.

3. It recently announced that it has received new purchase orders for 7 off shore vessels, 3 tug boats and 2 barges worth RM 268 million. The company has a total of RM 760 million purchase orders which will surely provide profits for the next few quarters. Unlike other construction contracts, all purchasers have to pay a proportionally large amount of cash deposits for their orders. That is why its account always show large amount of cash and very small borrowings. 6 of the 7 off shore vessels were ordered by Tidewater Group, the world largest and most experienced provider of marine support services. It is listed in the New York Stock Exchange.

4. The share closed on 30th March 2011 at RM 3.02 and its EPS for 2010 was 55.4 cents. It is now trading at P/E ratio of 5.5 which is exceptionally cheap for a company with such good track records.

by

Koon Yew Yin,
30th March 2011

 

Update on May 7, 2011

Coastal has just announced that it will give one bonus share for every
3 shares held and one free warrant for every 8 shares after the bonus
issue. It also wants shareholders’ approval for share buy back.

Koon Yew Yin

Disclaimer:

All information and data on this blog site is for informational purposes only.  I make no representations as to the accuracy, completeness, suitability, or validity, of any information.  I will not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use.

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11 Comments

  • Lau

    Reply Reply April 1, 2011

    will keep an eye on this… thx!

  • Choe

    Reply Reply April 7, 2011

    wow… rose 50 cents already. Regret for not buying it. Hey KC, share us more on potential stocks please. I dare not trust Dali as most of the time they are speculating.
    Or perhaps, you should become another “Dali” :)

    • KCLau

      Reply Reply January 18, 2013

      Hi Choe,

      Thanks for your kind words. Please beware that it is always a conflict of interest when someone recommend a share. For example, if I have a lot of share on Company A, and I promote the company stock aggressively, the share price might be pushed up. Then I might take the opportunity to make an instant gain.

      So I recommend that always do your due diligence before investing. Don’t simply listen to other people’s advice, especially free advice.

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