Going For Listing: Carimin debuts amid uncertain oil price outlook

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IN a bid to enhance its capabilities, Carimin Petroleum Bhd is debuting on the Main Market of Bursa Malaysia on Monday (Nov 10). At the same time, it is bracing itself for the prevailing weak sentiment in oil and gas stocks.

The group’s managing director, Mokhtar Hashim, says it wants to build its capacity and marine capabilities in the next five years, post-initial public offering (IPO).

“We are going for listing because with the funds, we can build ourselves up … We have been in existence for 25 years. We started small, growing slowly but surely … we are here to stay and grow,” he says.

The company is in the business of offshore hook-up and commissioning (HUC) and provides production platform system maintenance and upgrading, minor fabrication, equipment rental and manpower supply services.

Noting that there will not be any HUC jobs over the next five years, Mokhtar says Carimin is looking for other jobs, especially in the engineering, procurement, construction, installation and commissioning (EPCIC) space. Without disclosing the details, he says the group may partner a local engineering outfit to be able to secure an EPCIC job.

“We may work with a local engineering outfit to bid for the job … most of the jobs are in procurement, construction and commissioning [which Carimin can carry out] and engineering is just a small portion of it.”

Carimin has a tender book value of about RM800 million. Mokhtar says it has a success rate of about 60% in its bids. “I would not go in if I don’t think I can win. My confidence level is very high, I know what we can and can’t do.”

Currently, the group has an order book of just over RM900 million, the bulk of which is from an HUC and topside major maintenance contract from Petronas Carigali Sdn Bhd under the Pan Malaysia project off the shores of Peninsular Malaysia. Valued at an estimated RM899 million, the contract is until May 2018.

The rest of its order book comes from its manpower supply services.

Carimin, which raised RM66.77 million from selling 60.7 million new shares or 25.95% of its enlarged share base for its IPO, will have a market capitalisation of RM257.27 million upon listing based on its IPO price of RM1.10 apiece. Its market cap is larger than Tanjung Offshore Bhd’s RM164 million and PDZ Holdings Bhd’s RM230 million, but smaller than Daya Materials Bhd’s RM326 million at the time of writing.

Some 53% of Carimin’s IPO proceeds will be used to purchase an accommodation work barge (AWB) to complement its existing HUC job with Carigali. The AWB that it is eyeing has an estimated value of RM95 million — the remaining purchase price will be funded by borrowings.

Apart from that, 18% or RM12 million of the proceeds will be used to expand its existing fabrication yard in Kemaman, Terengganu, 12% or RM8 million to repay bank borrowings and the rest for working capital and listing expenses. Mokhtar says the acquisition of the AWB will help the group decrease its reliance on rented assets to implement jobs.

Carimin currently owns an anchor handling tug supply vessel dubbed Carimin Airis. It also co-owns an AWB, SK Deep Sea, through its 14% investment in Synergy Kenyalang Offshore Sdn Bhd.

“We intend to run and manage our own fleet … Eventually, we will own the vessel and take control of the operations as well,” says Mokhtar.

On the weak industry sentiment, he says, “I think by looking at the response we got by getting the 22.1 times oversubscription [for the public portion of 11.7 million shares], it must say something about it (the group), there must be something that the public is seeing [in the group].”

Of the new shares, only 11.69 million were offered to the general public while another three million were earmarked for directors and employees.

Some 46.01 million shares or 75.8% of the public issue were placed out to unnamed investors. That does not include the 5.89 million or 2.52% of Carimin’s enlarged share base being offered for sale to private investors by Mokhtar and Platinum Castle Sdn Bhd (Wan Hamdan Wan Embong), which will collectively raise RM6.48 million.

A total of 71.98% equity interest belonging to the group’s five promoters will be under moratorium for six months following the IPO, according to the prospectus. They are Mokhtar’s 31.82%, Cipta Pantas Sdn Bhd’s (Wong Kong Foo and the estate of Datuk Yahya Ya’acob) 17.41%, Platinum’s 12.83%, executive director Shatar Abdul Hamid’s 6.91% and non-executive chairman Tan Sri Kamaruzzaman Shariff’s 3.01%.

Carimin’s IPO price of RM1.10 is 11.75 times its diluted pro forma earnings per share of 9.36 sen for the financial year ended June 30, 2014, and 1.49 times pro forma net asset per share of 74 sen.

According to the pro forma accounts in its prospectus, Carimin’s net profit rose 12.28% year on year to RM21.9 million in FY2014, despite revenue falling 24.62% to RM245.58 million.

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This article first appeared in The Edge Malaysia Weekly, on November 10-16, 2014.