Hot Stocks Scomi stocks rise on Edge report of Quek's buy in Scomi Energy

by **Cals** Mon 17 Feb 2014, 18:46

Hot Stocks Scomi stocks rise on Edge report of Quek's buy in Scomi Energy

Business & Markets 2014

Written by Ahmad Naqib Idris Adzman Shah of theedgemalaysia.com

Monday, 17 February 2014 11:47

KUALA LUMPUR (Feb 17): Scomi Energy Services Bhd (SES) and Scomi Group Bhd’s share prices rose today after several news reports highlighted market talk that tycoon Tan Sri Quek Leng Chan may have made his entry into SES.

At 11.33 am, SES was traded at RM1.12, up 12.5 sen or 12.6%, with 26.9 million shares exchanging hands.

It had earlier risen as much as 14 sen or 14.1% to a high of RM1.14.

Its parent company, Scomi Group Bhd, also rose in tandem, rising as much as 3.5 sen to 43 sen and was one of the most active stocks on the bourse with some 47.2 million shares done.

According to The Edge Weekly, 268.8 million Scomi Energy shares which equals to an 11.5% stake, were moved off market last Friday, which sources said have been purchased by Quek at 76.5 sen per share.

With the purchase of the shares, Quek would be the second largest shareholder of SES, after Scomi Group Bhd which has a 65.7% stake.

The seller of the block of shares is believed to be Standard Chartered Private Equity Ltd, which held an 11.5% stake in SES.

Hong Leong Investment Bank Bhd (HLIB) viewed the takeover talk positively.

“If the purchase is true, we are positive on the entry of a new strategic investor given it will remove the share overhang concern as we understand that Standard Chartered PE had been looking to dispose its stake for months now,” said HLIB.

The research house also said that Quek’s entry into SES is at the right and exciting timing as the company has a potential risk service contract (RSC), which involves the development of a marginal oilfield in Ophir cluster off Terengganu.
The Ophir oilfield is estimated to contain 5 million barrels of oil, according to HLIB, which may boost SES’ earnings estimate by 16% if the group wins the contract, assuming oil production to commence in 2HCY15 with full contribution in CY16.

Besides that, SES is also confident in securing several job orders in the South East Asian and Middle East regions, which will boost its current orderbook of more than RM5.3 million.

“Despite our current target price (TP) of RM1.02 only provides 2.5% upside, we maintain our “buy” call as the potential win of the RSC will boost our TP to RM1.18, which provides 19% upside from the current share price,” said the research house.