OSK Research is maintaining its Neutral recommendation on Tanjung Offshore and its target price is RM1.73 based on PER of 11x FY11 EPS after the company secured a contract extension valued at RM100 million.
“We continue to like the company for its diversified businesses ranging from the provision of offshore vessel services, drilling, production and platform services to supply of equipment, engineering and maintenance services,” it said on Thursday, Sept 30.
On Wednesday, Tanjung Offshore announced its unit Tanjung Offshore Services was awarded a contract extension by Petrofac (Malaysia PM-304) Ltd (Petrofac) to supply of mobile offshore production unit for Cendor Field, Block PM-304 for an extended period effective Sept 24, 2010 to the 2Q13.
OSK Research said the contract extension will reduce its reliance on a particular business segment in the event if there is a slowdown due to the delay in new contract awards.
“Going forward, we believe the recent emergence of Ekuinas as a substantial shareholder of the company holding 24% of its stake will further boost the profile of the company,” it said.
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