KUCHING: Shipbuilder TAS Offshore Bhd
may consider sourcing funds from the equity market for substantial capital expenditure required to finance its business expansion plan.
Another option in its business plan is to explore synergistic and reliable joint-venture (JV) partnerships, the Sarawak-based company divulged in its 2024 annual report released last week.
TAS is in the midst of acquiring land to expand its shipyard in Sibu to increase its shipbuilding capacity to cope with the growing order book.
On June 19, its wholly-owned subsidiary, Pantas Marine Sdn Bhd, inked sale and purchase agreements with Saragreen Sdn Bhd to acquire three parcels of land adjacent to TAS’s existing shipyard and another parcel of land in Tanjung Manis, Sibu for RM12mil.
The proposed acquisition is expected to be completed in the current quarter (3Q24).
“For working capital requirements, our group relies on internally generated funds and short-term bank borrowings.
“For substantial capital injections required by our business plan, we may consider sourcing funds from the equity market and exploring synergistic and reliable JV partnerships,” TAS said in a management discussion and analysis.
According to chairman Datuk Mohammed Sepuan Anu, the TAS group signed 12 shipbuilding contracts worth a total of RM86.66mil in the financial year ended May 31, 2024 (FY24) with customers from Indonesia (85% of new contracts) and Singapore (15%).
During the year under review, the group completed and delivered 10 units of tugboats with a total contract value of RM67mil to shipowners in Indonesia and Singapore. These shipbuilding contracts were financed through the group’s internally generated funds.
The sales of the tugboats doubled group revenue to RM72.39mil in FY24 from RM36.13mil in FY23, but group post-tax profit decreased to RM9.66mil from RM15.28mil year-on-year.
Currently, TAS group has RM210mil worth of remaining shipbuilding contracts being implemented, which are expected to contribute positively to its financial performance in 2025 and 2026.
“This strong order book underscores our group’s capability and commitment to meeting the growing demand from our clients while maintaining our focus on innovation and environmental sustainability,” said TAS.
Mohammed Sepuan said the positive outlook for the mining industry in Indonesia is expected to spur demand for more tugboats which are essential for transporting mining products, especially coal and nickel.
“Indonesia’s mining sector continues to show promising potential. According to the International Energy Agency or IEA, revenue from nickel, copper and tin production in Indonesia could reach US$40bil by 2050.
“Coal remains a cornerstone of the industry, with the Energy and Mineral Resources Ministry increasing the 2024 coal production quota by nearly 30% to 922.14 million tonnes. The targets for 2025 and 2026 are set at 917.16 million tonnes and 920.97 million tonnes, respectively.
“Domestic coal demand is expected to rise, driven by electricity needs and the nickel industry. Additionally, demand from China and other regional importers supports the surge in production. Competitive prices and geographical proximity are projected to sustain Indonesia’s coal exports even as prices decline.
“China and India, the world’s largest coal importers, continue to rely heavily on coal due to slow growth in renewables and gas-based generation, with net-zero emission targets set for 2060 and 2070, respectively.
“Indonesia’s dominance in the global nickel market is set to increase, thanks to its vast reserves and low production costs,” he added.
Indonesia primarily uses barges and tugboats for domestic and international transportation, as barge transportation is cost-effective and preferred for bulk commodities like coal and crude palm oil.
This method, said TAS, is efficient, reducing the number of trips needed and consequently lowering fuel consumption and carbon emissions, making it an environmental friendly option.
TAS said the global tugboat market is projected to grow from US$23.81bil in 2024 to US$74.29bil by 2032, at a compound annual growth rate of 15.3%.
“This growth is driven by economic expansion, increased consumer demand and the expansion of international supply chain. The surge in maritime activities in the fast-growing economies of the Asia-Pacific region further boosts the demand for tugboats.
“Our group is well-positioned to benefit from the positive outlook of the tugboat market, supported by a strong client base in Indonesia,” said the company.
TAS said besides being actively engaged in the construction of tugboats for the mineral ores industry, the group builds harbour tugs for port operations and landing craft for various transportation purposes.
