Tanjung Offshore 4Q profit drops 84.7% to below RM700,000, cites most contracts still at bidding stage

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KUALA LUMPUR (Feb 26): Oil and gas (O&G) services provider Tanjung Offshore Bhd saw its net profit for the fourth quarter ended Dec 31, 2014 (4QFY14) plunged 84.7% to RM692,000, from RM4.52 million previously.

For the quarter, revenue shrank 79.03% year-on-year to RM19.49 million, from RM92.97 million; while earnings per share deteriorated to 0.19 sen, from 1.28 sen.

In a statement, Tanjung (fundamental: 1.95; valuation: 1.8) said the gloomy numbers were a result of tougher conditions in the O&G sector, as well as the ongoing rationalisation of the group’s businesses, following the disposal of its marine vessel servicing business to Ekuiti Nasional Bhd in 2012.

The reduction in overall revenue was also because most contracts are still at the bidding stage, the group explained. “In line with lower revenue registered in the current quarter, the group registered a lower net profit after tax,” it added.

As for the full year ended Dec 31, 2014, Tanjung’s net profit tumbled 90.27% to RM1.06 million, from RM10.91 million a year earlier. Its revenue also fell 67.23% to RM107.43 million, from RM327.79 million.

According to the group, this was due to the disposal and closure of unprofitable subsidiaries and divisions, as well as completion of various legacy engineering equipment contracts.

In view of the volatility of oil prices, Tanjung said it is cautiously optimistic on the prospects of the O&G industry in Malaysia and within the region.

“We believe we can penetrate into new areas of investments and niche markets within the industry for growth, with better product offerings and services in the near future,” it added.

Tanjung closed 1.85% higher at 55 sen today, translating into a market capitalisation of RM204.62 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)