Thursday 28 Mar 2024
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KUALA LUMPUR (June 25): Tanjung Offshore Bhd, which has been in the limelight after a boardroom fight broke out early this year and more recently for making police reports over questionable deals, is introducing a four-pillar turnaround strategy, which will help the oil and gas (O&G) service provider return to profitability by the third quarter ending Sept 30, 2015 (3QFY15).

The four pillars involve focusing on the offshore support vessel (OSV) market, the brownfield O&G segment, maintenance and its recently acquired Gas Generators (Malaysia) Sdn Bhd (GasTec).

"Much (turnaround) still depends on the overall situation such as pick up in the O&G sector and whether we can weather the storm. But I think the situation will be better by early next year," Tanjung Offshore chief executive officer Rahman Shamsudin told reporters after the group’s annual general meeting today.

Tanjung Offshore executive deputy chairman Tan Sri Tan Kean Soon said the group is looking at several brownfield projects both locally and aboard to add to its RM500 million order book.

"We are keeping a close eye on new O&G discoveries in Malaysia, particularly Sarawak, Sabah and Terengganu," he added.

It is also looking for opportunities in Indonesia, Vietnam and Myanmar.

"We have the right mix of services to grow with these new discoveries in undertaking onshore and offshore projects," said Tan.

The group plans to inject some RM100 million in capital expenditure (capex) over the next years for its brownfield segment activity.

In addition, Tanjung Offshore will strengthen its maintenance and services division by forming partnerships with international O&G players to undertake maintenance and services projects at the Refinery and Petrochemical Integrated Development (Rapid) project in Pengerang, Johor.

"We are in talks with major contractors from South Korea and Japan on possible joint venture opportunities,” said Tan, but nothing has been confirmed yet.

Additionally, Tanjung Offshore will re-enter the OSV market following the expiry of the three-year "non-compete clause". Tanjung Offshore had sold off its OSV arm Tanjung Kapal Services Sdn Bhd to Equiti Nasional Bhd in 2012.

"It (the non-compete clause) will lapse in mid-July this year,” said Rahman.

"OSV (business) can be one of the group's revenue contributions provided charter rates are favorable,” he added.

"Despite the relatively flat global relatively of late, Tanjung Offshore’s business activities are not heavily contingent on oil prices and that the group is seeking out technologies that would enable lower operational costs,” he said.

On its subsidiary GasTec, Rahman said the group will look to expand into the mechanical and engineering segment.

For the first quarter ended March 31, 2015, Tanjung Offshore fell into the red, registering a net loss of RM1.97 million against a net profit of RM2.10 million a year ago.

As at 11.57am, Tanjung Offshore (fundamental: 2.25; valuation: 0.9) shares were traded 4.08% lower at 47 sen, with a market capitalisation of RM178.16 million.

(Note: 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.)

 

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