Friday 29 Mar 2024
By
main news image

Aisabio-Tan_28Jan2015_theedgemarkets

KUALA LUMPUR: Asia Bioenergy Technologies Bhd (Asiabio) is venturing into the oil and gas (O&G) transport sector by acquiring Semua Shipping Sdn Bhd (SSSB) and Semado Maritime Sdn Bhd (SMSB). The deal is valued at RM168 million, and will be fully funded by the issuance of new Asiabio shares to vendors. 

Asiabio (fundamental: 1.2; valuation: 0) yesterday entered into a heads of agreement (HoA) with vendors Singapore-based Hoe Leong Corp Ltd (HLCL), Sumatec Resources Bhd and Reachmont Logistics Sdn Bhd (RLSB) to facilitate the acquisition of SSSB and SMSB.

Under the HoA, SSSB and SMSB will be transferred to a special purpose vehicle (SPV). Subsequently, Asiabio will acquire the entire equity interest of the SPV by issuing shares worth RM168 million to HLCL, RLSB and Ebony Ritz Sdn Bhd (ERSB). The shares to be issued will translate to about a 20% stake in Asiabio’s enlarged shareholding, the group’s executive director Steve Tan Sik Eek told a press conference yesterday. 

Tan said the next step is for Asiabio to conduct due diligence upon SSSB and SMSB, and secure the relevant regulatory approvals. The agreement will have an exclusivity period of three months, and the parties involved are expected to finalise the deal in three to six months. Asiabio is involved in green technologies and the renewable energy sector.

“For SSSB and SMSB [which are involved] in transporting refined petroleum products, [a] lower crude oil price actually benefits them because fuel consumption usually accounts for 30% to 35% of [their] total [operating] costs,” Tan said when asked to justify the group’s decision to venture into the O&G-related sector amid falling global oil prices.

“The O&G transport businesses stand to benefit from lower costs with fixed vessel charter contracts and stable demand for refined petroleum,” he said.

Tan foresees the SPV will achieve a profit after tax (PAT) of RM14 million for the financial year ending Dec 31, 2015 (FY15), which is 75% more than the combined PAT achieved by SSSB and SMSB of RM8 million last year.

Asiabio, on the other hand, has been loss-making since FY12 ended Jan 31, 2012. In the nine months ended Oct 31, 2014 (9MFY15), it posted a net loss of RM1.28 million, compared with a net loss of RM914,000 in 9MFY14.

At the press conference, RLSB director Bong Siet Fah said SSSB and SMSB have secured charter contracts worth over RM200 million for their tankers and vessels.

“We usually renew [contracts] every three years, so as to revise the relevant terms and conditions from time to time,” he said.

Both SSSB and SMSB are wholly-owned subsidiaries of Semua International Sdn Bhd, which is 49% owned by RLSB; 49% owned by ERSB; and 2% owned by HLCL, which owns an 80% stake in ERSB.

Based on Asiabio’s filing with Bursa Malaysia, Semua International is also considered an associated company of Sumatec (fundamental: 2.6; valuation: 0.3), which is controlled by Tan Sri Halim Saad. This is due to certain loan obligations between Sumatec and RLSB.

Tan said the ultimate shareholdings in Asiabio after the acquisition could not be ascertained now as the definitive agreement is not finalised yet.

Currently, Asiabio’s largest shareholder is CPE Growth Capital Ltd with a 11.13% stake or 93.5 million shares, followed by Perlaburan Mara Bhd, which owns a 10% stake or 84 million shares.

 

The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. Go to www.theedgemarkets.com for more details on a company’s financial dashboard.

 

This article first appeared in The Edge Financial Daily, on January 28, 2015.

      Print
      Text Size
      Share