| Investment Bank | TA SECURITIES |
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
TA SECURITIES has reiterated its “BUY” recommendation, setting a target price of RM0.25, which implies a 25.0% upside from the last traded price of RM0.20. This positive outlook is maintained despite the company reporting core net profit for FY25 that fell below both the investment bank’s and consensus expectations.
Performance Review
The company’s core net profit for FY25 reached RM55.9 million, representing approximately 70% of full-year forecasts. This significant variance was primarily attributed to the absence of vessel chartering contributions, largely stemming from lower utilisation of its TC7 asset.
The Gas Processing segment recorded a loss before tax (LBT) of RM7.9 million, a stark contrast to the profit before tax (PBT) of RM9.5 million in 3QFY25. This downturn was mainly due to non-recurring operating costs associated with the jack-up gas compression service unit. Similarly, the Vessel Chartering division experienced a significant 95.5% quarter-on-quarter drop in revenue, leading to an LBT of RM48.5 million in 4Q2025, a sharp reversal from the PBT of RM6.5 million in 3Q2025, driven by subdued vessel utilisation rates. The “Others” division also saw its PBT turn negative at RM19.1 million, impacted by unrealised foreign exchange losses on USD-denominated investments amidst the strengthening of the Malaysian Ringgit against the USD.
Mitigating Factors and Growth Drivers
Despite the immediate challenges, the Shipbuilding and Shiprepair segment demonstrated resilience, with revenue increasing to RM5.2 million from RM0.5 million. This segment successfully converted a previous quarter’s LBT of RM1.3 million into a PBT of RM2.7 million, attributed to the completion of several repairing contracts.
The company also maintains a robust balance sheet, boasting approximately RM858.0 million in cash and cash equivalents, much of which is strategically placed in short-term investments such as Money Market Funds. This strong financial position provides significant flexibility for pursuing key growth initiatives.
Looking ahead, the shipbuilding division is poised for expansion, supported by an existing order book of three utility support vessels under construction, with deliveries scheduled for 2H25 and 1H26. Additionally, three high-end Offshore Support Vessels (OSVs) are in the pipeline for staggered deliveries between 1H26 and 1H27. The company is also exploring new ventures, including discussions with luxury hotel operators for the management of its Pulau Mabul resort, with contributions from the Hospitality segment anticipated from FY26 onwards. While TC7 recently secured an 88-day liftboat charter, its previous contract was terminated due to the inability to meet certain technical requirements identified during an on-hire inspection.
Future Outlook
TA SECURITIES is maintaining its earnings forecasts, awaiting clearer guidance on the potential extension of the TC7’s charter contract, which is expected to be addressed in the upcoming analyst briefing. Furthermore, the investment bank has introduced an FY28 core net profit forecast of RM85.5 million, underscoring its long-term confidence in the company’s prospects.
Rating and Valuation
The investment bank reiterates its “BUY” call, with the target price of RM0.25 based on a sum-of-parts valuation. The recommendation reflects the underlying value and future growth prospects despite recent operational headwinds, emphasizing the company’s strategic positioning for long-term recovery and expansion.
