Hong Leong: Drilling fluid, waste mgmt to drive Scomi Energy growth

by **Cals** Mon 10 Feb 2014, 11:36

Business & Markets 2014

Written by Ahmad Naqib Idris Adzman Shah of theedgemalaysia.com

Monday, 10 February 2014 11:02

KUALA LUMPUR (Feb 10): Scomi Energy Services Bhd's plan to grow its drilling fluid and waste management (DWM) business is seen as a "game changer" for the firm, Hong Leong Investment Bank Bhd (HLIB) said.

HLIB analyst Jason Tan Yat Teng said DVM was seen as the main growth driver for Scomi Energy in the long term.

"DWM will be the main booster for long-term growth as legislation is trending towards zero discharge as adopted in the Caspian and North Sea. We understand that the company is in the vanguard of the development of microwave technology for the treatment of oil-contaminated drill cuttings.

"The commercialisation of this product in 2014 might be the game changer and new growth driver for the company," Tan said.

HLIB's note follows a meeting with Scomi Energy officials.

Tan said HLIB was positive on the prospects of Scomi Energy as the group planned to double its DWM market share.

He said Scomi Energy aimed to double its DWM market share to 14% from 7% in the next seven years. Scomi Energy plans to cross-sell its products and enter new markets as it aims to become an integrated oilfield services provider.

“We came away from the meeting feeling positive given the current prospect on the DWM business.

“We also applaud the company’s long-term strategy to become an integrated oilfield services provider as national oil companies and oil majors are outsourcing turnkey projects due to a shortage of talent,” said Tan,

Tan said Scomi was confident of securing several jobs in Southeast Asia and the Middle East in the near-term, hence, boosting its current orderbook of RM5.3 billion.

HLIB maintains its “buy” call on Scomi Energy shares with a target price of RM1.02.