HwangDBS cautious on Tanjung Offshore

HwangDBS Vickers Research Sdn Bhd remains cautious of Tanjung Offshore Bhd's outlook given the slow performance of its non-marine chartering division which has been a drag on rofitability.

Tanjung Offshore has been awarded long-term charter contracts from Petronas for three offshore service vessels (OSVs) collectively valued at RM50 million.

The long-term contracts for the OSVs are for a period of between one and three years, effective June and July this year, respectively, with options to extend for a period of between one and two years.

HwangDBS said there was no change to its earnings forecast on Tanjung Offshore as it has imputed utilisation rate of 90 per cent for financial year 2011, which is likely given that all its 16 vessels are currently chartered out.

Meanwhile, OSK Research Sdn Bhd said it has no change to its financial year 2011 and 2012 forecasts as it had earlier assumed some orderbook replenishment for its vessels.

It maintained a "neutral" call on Tanjung Offshore with the fair value unchanged at RM1.29.

"At this junction, we are not too optimistic about the company given its two consecutive quarterly net losses, even though the bulk of its OSVs are on long-term charter with Petronas and its production-sharing contracts contractors," said the research house.

It said the immediate catalyst to Tanjung Offshore's share price recovery would be the listing of Bumi Armada, which is expected to boost the sentiment of all oil and gas vessel players in Malaysia. it added. -- Bernama