KUALA LUMPUR (Aug 13): The Edge weekly in its latest edition reported that back in September 2008, Swiber Holdings Ltd was among Forbes Asia’s 200 “Best under a Billion” companies based on the consistent growth in both its revenue and profit over the previous three years.
In its cover story, the Edge’s Jose Barrock and Kamarul Azhar said that in a nutshell, prior to the steep fall in oil prices in mid-2014, Swiber was the darling of investors.
The weekly said that not surprisingly, there was some trepidation late last month when Swiber filed for liquidation, with many questioning whether what is going on across the Causeway might trickle down to Malaysia.
In the weekly’s analysis of the turbulent times faced by the oil and gas sector, it said that other than Swiber, Technics Oil & Gas Ltd has been placed under judicial management after experiencing financial troubles.
Technics is 29.87%-controlled by local construction outfit Eversendai Corp Bhd. In late February and early March this year, Eversendai acquired additional shares in Technics for RM8.82 million, pushing up its holding to the current level from 19.62%.
The Edge reported that as at Feb 29, the market value of Eversendai’s shares and warrants in Technics was RM18.82 million and RM1.09 million respectively and the company was sitting on a loss of RM65.8 million and RM7.46 million respectively, which is a lot considering Eversendai’s market capitalisation is about RM350 million.
In the first three months of FY2016, Eversendai suffered a net loss of RM50.42 million on revenue of RM440.72 million, compared with a net profit of RM19.4 million on revenue of RM402.78 million in the previous corresponding period.
In the press release that accompanied its results, Eversendai says the bleeding was “mainly due to higher loss resulting from fair value of financial assets and unrealised foreign exchange loss without which there would have been a profit of RM24.2 million”.
Meanwhile, some companies have turned the corner, albeit posting measly profits, after bleeding profusely in the previous quarters.
In its three months ended March 31, Robert Kuok’s Malaysian Bulk Carriers Bhd (Maybulk) suffered a net loss of RM24.08 million on a turnover of RM53.5 million. Maybulk’s shipping arm bled red ink but its 21.23% associate, PACC Offshore Services Holdings Ltd (POSH), which operates offshore support vessels, reported a profit of US$4.5 million for the first quarter of 2016, resulting in a RM4.03 million share for Maybulk.
Prior to this, both POSH and the shipping arm weighed on Maybulk. In the fourth quarter of its financial year 2015, Maybulk’s share of loss from POSH was RM120.75 million.
The Petronas factor
The Edge said that the general consensus is that Malaysia is unlikely to be as badly hit as Singapore.
It cited Gan Eng Peng, head of equity strategies and advisory at Affin Hwang Asset Management Bhd, as pointing out the one thing that local oil and gas companies have that their counterparts across the Causeway do not — support.
“Malaysian companies have the support of Petronas (Petroliam Nasional Bhd),” the magazine quoted him as saying.
It said such support makes a world of difference because the national oil company’s capital expenditure for this year alone is around RM70 billion.
While Singapore’s Temasek Holdings has controlling equity in the city-state’s oil and gas companies, for example a 20% stake in Keppel Corp Ltd, it does not dish out jobs like Petronas.
Nevertheless, a weaker financial footing has forced Petronas to tighten its belt.
For the detailed analysis of the sector and what lies ahead for the local players, read the full story in the Edge for the week of Aug 15 – Aug 21 available at newsstands now.
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