OVER the past few weeks, Lembaga Tabung Haji (LTH) has seen the value of its oil and gas (O&G) investments fall as oil prices tumbled. LTH may also have seen more impact than other funds as 5.1% of its portfolio is invested in the energy sector. Other institutional funds, such as the Employees Provident Fund, Kumpulan Wang Persaraan and Skim Amanah Saham Bumiputera, have less than 3% each.

For instance, the worth of LTH’s shareholding in Icon Offshore Bhd has halved in the past six months. Its 8.43% stake is now worth about RM74 million compared with RM189.7 million on June 25 when the company’s share price peaked at RM1.91.

LTH increased its shareholding in recently listed Icon Offshore this month, buying 16.2 million shares at prices ranging from RM1 to RM1.18. However, the counter has now plunged further, closing at 74.5 sen last Tuesday.

Currently, LTH holds some 99.3 million shares in Icon Offshore.

“If LTH had purchased the 16-odd million shares at 74.5 sen, it would only have amounted to about RM12 million instead of the RM18 million it had to fork out … about a third lower,” a market watcher says.

Analysts say share prices of most O&G companies have not fully bottomed out and some are declining further as the outlook for oil prices remains uncertain. (Brent crude oil closed at US$60.51 per barrel last Tuesday.)

By and large, the pilgrims fund board’s investments are mostly in the red, as a result of its mistimed acquisitions.

LTH was one of the early investors in Icon Offshore, which was listed on June 25. It purchased some 77.1 million shares on Aug 12.

Icon Offshore’s core business has been bogged down by an oversupply of assets in the industry, which dampened the company’s outlook. This month, several analysts downgraded the stock to “hold”, “underperform” and “sell” ratings.

Since its listing, Icon Offshore’s share price has plunged 59.73% to 74.5 sen last Tuesday. Recently, the company saw a 19.5% plunge in a single trading day on Dec 22.

It was the most active counter last Monday, with 68.76 million shares being traded.

The selling came at the end of a six-month lock-up period imposed on the promoters, namely Ekuiti Nasional Bhd (Ekuinas) and Icon Offshore CEO Jamal Yusof, from the date of the offshore support vessel provider’s listing. Ekuinas and Jamal collectively own about 52% of Icon Offshore.

While LTH’s investments are fairly diversified, with the bulk of them in the financial and industrial sectors, its energy investment portfolio can be considered as aggressive, an analyst says.

“As a matter of fact, LTH has been one of the most active institutional investors in the energy industry,” the market watcher says.

Among the O&G counters that LTH has a significant shareholding in are TH Heavy Engineering Bhd where it has a 30.06% stake, Alam Maritim Resources Bhd (10.36%), Uzma Bhd (9.95%), Petra Energy Bhd (9.85%), Icon Offshore (8.43%), Perdana Petroleum Bhd (8.42%), Tanjung Offshore Bhd (7.87%), Dayang Enterprise Holdings Bhd (5.66%) and Wah Seong Corp Bhd (5.12%).

According to LTH’s website, its objective is to generate sustainable and competitive returns from capital gains and dividends at reasonable risk levels.

However, under current market conditions, it appears that LTH is looking to accumulate shares at a low price and capitalise on the share price appreciation, rather than keep the shares for dividends.

Malaysia’s largest Islamic fund manager, with more than RM41 billion under management, is seen to be accumulating shares that have fallen more than 50% year to date.

In the past six months, it has accumulated shares in Icon Offshore, Dayang Enterprise and Petra Energy, according to Bloomberg.

A previous misadventure

Some may remember that in 2008, LTH bought into a company called Ramunia Holdings Bhd, which has since been renamed TH Heavy Engineering. LTH ended up controlling the company after a misadventure.

To recap, in early 2008, national carrier MISC Bhd sought to inject its O&G unit Malaysia Marine and Heavy Engineering Sdn Bhd into Ramunia in a reverse takeover. However, the RM3.2 billion proposal was called off after MISC announced that there were “unsatisfactory due diligence findings”.

After MISC pulled out, Ramunia shed some 73% of its market capitalisation. The biggest loser was LTH, which found itself stuck with almost 29.7% of Ramunia’s shares and showing a paper loss of some RM175 million, having aggressively accumulated the company’s shares before the deal fell through.

This article first appeared in The Edge Malaysia Weekly, on December 29, 2014 - January 04, 2015.

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