Quality product; An offshore support vessel of TAS group.
KUCHING: Shipbuilder TAS Offshore Bhd
’s growth prospects remain bright amid the robust coal-mining activities in Indonesia, which will spur demand for tugboats needed for inter-island transportation of the bulk mineral.
According to its founder and group managing director Datuk Lau Nai Hoh, TAS had secured 27 new shipbuilding contracts worth about RM180mil in the 12-month period to May 31.
“All these new contracts are for the construction of tugboats,” he told StarBiz, adding that the contracts were from both traditional and new customers in Indonesia and Singapore.
Currently, the group’s shipbuilding yards in Sibu are running at full capacity and will be kept busy until first-quarter 2025.
“With our hands full, TAS would not be accepting any new shipbuilding orders unless the buyers are willing to wait and take delivery of the new vessels in 2025,” added Lau.
He noted the group’s order book, which now stood at RM203mil, would also contribute positively to TAS’ financial position for the financial year 2024 (FY24) and FY25.
“The encouraging developments in the coal industry in Indonesia augurs well for the TAS group. Hence, our board of directors are optimistic about our prospects,” he pointed out.
Lau further explained that rising coal prices and increased coal production in Indonesia have given a boost to TAS group’s financial performance, as “it has built and delivered more tugboats to clients”.
For FY23 ended May 31, TAS returned to profitability, registering a group net profit of about RM15.3mil on the back of RM36.1mil in revenue. This is in comparison to a loss of RM1.51mil on a revenue of RM57.5mil in FY22.
Lau said, “The profits were mainly due to a gain from the striking off of a subsidiary during the year. However, excluding the one-off gain, the group still recorded a profit of RM3.6mil, representing an increase of RM5.1mil compared with the preceding year.”
TAS is principally involved in shipbuilding and its secondary business is in the provision of ship repair services.
The group shifted its focus to the construction of tugboats and other types of vessels following the termination of shipbuilding contracts in July 2020 with China’s Guangzhou Hangtong Shipbuilding and Shipping Co Ltd and Jiangmen Hangtong Shipbuilding Co Ltd to build 16 offshore support vessels for the oil and gas sector.
Under these contracts inked between 2013 and 2015, the vessels to be constructed had a contract sum of between US$10.38mil and US$39.38mil depending on their sizes and specifications.
Due to the termination of these contracts, TAS suffered a massive group net loss of RM74.9mil in FY20.
Commenting on Indonesia’s prospect, Lau said the republic is the third largest coal producer in the world and a major coal consumer itself.
In fact, the coal consumption in Indonesia will continue to rise through 2029 as new coal plants continue to be built, according to Jakarta-based Institute for Essential Services Reform.
In addition, Indonesia’s Ministry of Energy and Mineral Resources estimated the country plans to produce 695 million tonnes of coal and sees exports of 518 million tonnes in 2023.
“This projection is largely due to the expected high demand from India and China, the country’s major coal export partners,” Lau added.
Recent media reports also said the coal markets were tight even before the ongoing Russia-Ukraine war as soaring natural gas prices in Europe and Asia in late-2021 intensified following the gas-to-coal switching in many countries.
Amid surging demand and persistent supply disruptions exacerbated by the war in eastern Europe, Indonesia Coal Mining Association said that the government had given approval to increase the country’s coal production.
Another major factor driving up coal production is the growing demand in the metals industry, particularly the nickel sector.
“The nickel industry is hugely energy intensive and in Indonesia,the power grid is dominated by coal.
“This will lead to higher demand for tugboats which are essential for inter-island transportation of bulk material in Indonesia,” Lau noted.
TAS in its annual report 2022 had also indicated the group will focus on the transportation, ports operations and mining industries in the short and medium-term.
In view of the expected recovery of the global economy, the group said it is actively prospecting for new clients from new market segments to add to its customer base to enhance the sales growth and profitability.
Overall, the group is positive about its ability to remain resilient during these challenging times, TAS said.
ENDS
