Icon, Alam Maritim want cash

by **Cals** Mon 14 Apr 2014, 00:06

Published: Saturday April 12, 2014 MYT 12:00:00 AM
Updated: Saturday April 12, 2014 MYT 10:54:54 AM
[size=40]Icon, Alam Maritim want cash
BY IZWAN IDRIS[/size]
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Schlumberger is an organization that not only encourages innovation, teamwork and global thinking, but insists on rewarding it.

The management at Icon Offshore Bhd and Alam Maritim Resources Bhd should be keeping a close tab on recent share sale exercises. They have a lot at stake as both firms are looking to sell shares for cash.
For one, the market is looking increasingly weary as the bull run enters into its fifth year.
The FTSE Bursa Malaysia KL Composite Index appears stuck in a tight trading band at near 1,850 points.

The upside for the index is quite limited, analysts said.
Big foreign funds like Blackrock Inc, for instance, believes there are better opportunities elsewhere.
It appears that the market’s lofty valuations, unpredictable fund flows and wild mood swings are hardly the most conducive enviroment for companies to launch their fund-raising activities.
But recent sales showed that investors are still hungry for offerings by oil and gas companies, and willing to pay top money for their shares.
Seadrill Ltd on Wednesday sold part of its shares in SapuraKencana Petroleum Bhdat the top end of the deal. The deal was upsized from its initial offer of 180 million to 230 million due to strong demand from local and foreign long term institutional funds.
At RM4.30 a share, the deal valued SapuraKencana at 17 times its projected earnings in financial year ending Jan 31, 2015. To compare, Seadrill is trading at 10 times earnings.
Since the merger in 2012, the enlarged SapuraKencana group had emerged as formidable global players. The company has a market capitalisation of RM26bil with an order book of about the same size.
The company models itself after US-giant Schlumberger Ltd, which is also trading at 17 times earnings.
Schlumberger is the most expensive company among the big four oilfield services that include Haliburton Co, Baker Hughes Inc and Weatherford International Ltdalthough the difference is almost negligible.
These companies derive a big chunk of their businesses in the Americas and Middle East. European-based companies like Technip SA and Petrofac Ltd, however, are trading at slight discounts to the American companies.
Global exploration and production spending is expected to hit a record US$723bil in 2014, according to Barclays Bank.
Meanwhile, Petronas is committed to spending big money on capital expenditure (capex) spanning over five years ending in 2016. Analysts say the strong capex growth in the upstream segment will keep the excitement going in the industry.
“SapuraKencana is the most dynamic company in our oil and gas portfolio,’’ CIMB Research analyst Norziana Mohd Inon says.
SapuraKencana has more than doubled its size since the merger and is projected to derive 65% of its revenue from overseas this year. The biggest near term earnings kicker will be from recent acqusitions of Seadrill’s tender rig business and the Newfield project.
Norziana values the company at RM6.75 per share.
Malaysian oilfield services providers have had a good run in the past three years, on rising charter rates and bigger contract awards that helped deliver growth faster than their global peers.
This allows companies like Perisai Petroleum Teknologi Bhd to expand and explore new businesses upstream. Last week, the company sold 108.3 million new shares to select investors at RM1.53 each to raise RM166mil.
The money will go towards paying for its third jack-up drilling rig. Perisai is expected to take delivery of its first jack-up rig next month.
At 19 times projected earnings, Perisai seems pricey at Friday’s close of RM1.62.
AmResearch say investors would have to look beyond 2014 and towards 2015 when the group’s jack-up rigs begin making significant contribution.
Another company which is waiting for its first drilling rig delivery is Coastal Contracts Bhd. The Sandakan-based shipbuilder raised RM207.7mil in March after it placed out 48.3 million shares to investors at RM4.30 each.
At RM4.97 yesterday, the stock is trading at 13 times its forecast earnings.
In the past six months, 12 oil and gas companies on Bursa Malaysia have launched their fund raising exercises through share placement, rights issues, acquisitions, initial public offerings and issuance of senior debts.
“We opine that the industry climate is still conductive for such fund raising activities in anticipation of higher job activities and higher new job orders,’’ says MIDF Research.
That is good news for Icon Offshore which is selling its shares to the public for the first time. Reports suggested that the company is seeking to raise RM450mil from its initial public offering.
For investors, the question is can Icon Offshore better recent steller IPO performers -UMW Oil, Gas Corp Bhd and Barakah Offshore Petroleum Bhd.
Icon Offshore may rank smaller compared with Alam Maritim , which owns and operates 42 offshore support vessels of various types.
Alam Maritim tells StarBizweek that it plans to raise as much as RM150mil to acquire diving support vessel. It has yet to decide on how to pay for the new ship.
Both Perisai and Coastal Contracts had opted to place out 10% of their shares to select investors, while Uzma Bhd recently announced that it will sell rights shares at a steep discount under a fund-raising scheme.
Apart from share sale, companies are also tapping into the bond market for funds.
Bumi Armada Bhd, which owns the biggest fleet of OSVs in the country and giant specialised vessels that process crude oil on board and store it for offloading later, said in March that it planned to raise RM1.5bil in sukuk for working capital.
The money will go towards building new floating, production, storage and offloading vessels.
There are worries that charter rates for workboats and drilling rigs won’t hold up forever, as seen before, but with crude prices holding steady at around US$100 a barrel, the outlook for the industry is solid.
Exciting growth prospects will probably keep oilfield services companies at the top of investors’ buy list for a while longer.