This article first appeared in The Edge Financial Daily on September 26, 2017

Scomi Group Bhd (-ve)
SHARES in Scomi Group Bhd (fundamental: 0.15/3, valuation: 0.9/3), which triggered our momentum algorithm yesterday for the fifth time this year, closed down 0.5 sen or 2.63% at 18.5 sen.

The counter saw 67.62 million shares done, exceeding its 200-day average volume of 5.8 million shares.

Scomi on Sept 15 received approval from Bursa Malaysia Securities Bhd to issue new shares to its directors, major shareholders or related parties without having to obtain approval from shareholders.

The approval was related to its proposal to consolidate its business via a three-way merger with its two subsidiaries, Scomi Engineering Bhd and Scomi Energy Services Bhd.

The company expects the proposal, announced on Aug 20, to strengthen the group’s balance sheet in the face of a challenging business environment and to facilitate its business expansion.

“It will also result in a reduction in administrative and operational expenses and dispense with the duplication that exists with three listed entities as all businesses will be housed under one listed company,” Scomi added, noting that the consolidation “should improve efficiency across its businesses”.

Scomi said it is optimistic that the consolidation exercise will provide it with a stronger financial base, which will also accord it with a group-wide flexibility to allocate resources among its business segments.

 At the current price, Scomi Group has a market capitalisation of RM352.07 million. Year to date, the stock has grown some 54.17%, and is 42.31% higher from 12 months earlier.