Carimin puts in bids worth RM800m

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KUALA LUMPUR: Upstream oil and gas (O&G) player Carimin Petroleum Bhd has put in three bids worth RM800 million as it seeks to replenish its order book, said its managing director Mokhtar Hashim.

Its total order book now stands at RM900.8 million, out of which RM800 million comes from its upstream business and RM100.8 million from the manpower supply business.

“We intend to replenish our order book through various tenders that we have submitted so far which will boost our earnings in the long run,” Mokhtar told reporters after the company’s debut on the Main Market of Bursa Malaysia yesterday.

Shares in Carimin opened at RM1.12 yesterday, 1.82% or 2 sen higher than its offer price of RM1.10. Carimin, the 11th company listed on Bursa this year, closed 4.5% or 5 sen higher at RM1.15, with 42.98 million shares done. Its market capitalisation stood at RM269 million.

Since its establishment in 1989, Mokhtar said Carimin has performed various upstream works worth RM1.33 billion for its major client Petronas Carigali Sdn Bhd.

This amount includes a five-year hook-up and commissioning contract worth RM899 million that it bagged in November last year, he said.

The group had also completed a total of RM265 million worth of projects for other O&G majors such as Petrofac Malaysia PM304 Ltd, Newfield Pensinsular Malaysia Inc and Murphy Sarawak Oil Co Ltd.

Inter-Pacific Research Sdn Bhd has a “subscribe” call on Carimin’s stock, with a target price of RM1.32 per share.

The research house added in its recent note to clients that its target price is pegged at a 30% discount to the average upstream industry peers which are trading at price-earnings between 15 and 20 times.

Mokhtar added that the listing exercise will increase the group’s cash and cash equivalents to RM23.32 million from RM15.37 million currently, and thus reducing Carimin’s tendency to seek external funding.

As for the proceeds of RM66.8 million raised from its initial public offering, Carimin plans to utilise 52.9% or RM35.32 million to purchase an offshore support vessel; 18% or RM12 million will be used to develop its yard in Terengganu, 12% or RM8 million to pay bank borrowings, 11.9% or RM7.95 million for working capital and 5.2% or RM3.5 million to pay for its listing expenses.

As at June 30, 2014, Carimin had total borrowings of RM41.9 million, translating into a gearing ratio of 0.39 times.

Mokhtar said the repayment of bank borrowings from part of the listing proceeds will optimise its financial position and reduce its interest cost by between RM240,000 and RM400,000 annually, based on effective interest rate of between 3% and 5% respectively.


This article first appeared in The Edge Financial Daily, on November 11, 2014.