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From Shipbuilder to Profit Machine: How Coastal Contracts Reinvented Itself
On a weekly chart for Bursa Coastal Contracts, the technical picture remains bearish. The stock is in a long-term downtrend, with selling pressure evident in the momentum indicators and weak participation reflected in below-average trading volume.
However, the fundamentals tell a different story.
In 2019, Coastal was primarily engaged in shipbuilding, ship repair, and vessel chartering. Yard operations and marine-related activities were the core of its business. Since then, the company has undergone a strategic transformation:
• 2021–2023: Coastal significantly reduced its emphasis on shipbuilding and shifted its focus toward offshore gas infrastructure, particularly in gas processing and compression services.
• 2024: Coastal is now predominantly involved in energy infrastructure support services, delivered through long-term contracts under joint ventures - most notably the Perdiz and EMC gas compression projects in Mexico.
This transformation has placed the company in a stronger profit position. Return on equity rose from 1.2% in 2019 to 9.3% in 2024, reflecting improved capital efficiency and a more resilient income base.
Importantly, this change in business model is fortuitous, given the declining crude oil prices following the global tariff war. In 2019, Coastal's performance was closely tied to oil prices, as demand for newbuild vessels and charter services moved in tandem with offshore exploration activity.
By contrast, in 2024, while it still serves the upstream oil and gas sector via PEMEX, its exposure to volatile crude prices is now indirect.
Yet, the recent decline in Coastal’s stock price appears disconnected from its improved fundamentals and reduced risk profile - as illustrated in the Fundamental Mapper.
If you want to understand more about the impact of declining crude oil prices on other Bursa E&P companies, join me this at today’s podcast
