Sumatec climbs further on expectation of an uplift from PN17 status

by **Cals** Wed 06 Aug 2014, 01:04

Business & Markets 2014

Written by Supriya Surendran of theedgemalaysia.com

Tuesday, 05 August 2014 09:41

KUALA LUMPUR: Oil and gas firm Sumatec Resources Bhd rose as much as 7.53% in anticipation of an uplift from its Practice Note 17 (PN17) status as well as its planned acquisition of Borneo Energy Oil and Gas Ltd.

Sumatec has been on the top five actively-traded list in recent weeks. The counter climbed further yesterday up three sen to close at a nine-month high of 49.5 sen after it hit the day’s peak of 50.5 sen. Trading volume soared to 362 million shares.

An analyst from Public Investment Bank Bhd said the increase in share price could be attributed to market anticipation that Sumatec would be uplifted from its PN17 status soon.

“Sumatec needs two quarters of profits to uplift itself from PN17 status, therefore, the share price increase could be due to anticipation from investors that the company will deliver profitable results for its second quarter ended June 30, 2014 (2QFY14),” said the analyst.

Sumatec chief executive officer Chris Dalton had earlier stated that the company planned to exit from its PN17 status by next month (September).

Another analyst who spoke on condition of anonymity attributed the increase in Sumatec’s share price to its recent planned acquisition of Borneo Energy Oil and Gas, which owns the Karaturun oil fields in Kazakhstan through its wholly-owned subsidiary Buzachi Neft LLP.

“I believe that the increase in share price is due to Sumatec buying into the Kazakhstan assets. However, this is purely speculative as the company is still under PN17 status,” said the analyst.

Sumatec has been profitable in the two consecutive quarters. For 1Q ended March 31, the company achieved net profit of RM4.47 million compared to a net loss of RM5.21 million.

In the preceding quarter ended Dec 31, Sumatec’s net profit jumped to RM100.5 million. The surge in earnings was mainly attributable to the one-off waiver of debts of RM85.27 million and writeback of impairment on receivables of RM12.05 million arising from the group’s regularisation completed in the current quarter. In addition, the disposal of the shipping business in the quarter has also lifted its earnings as the shipping business incurred a loss of RM35.10 million in the corresponding quarter last year, according to the result announcement to Bursa Malaysia.

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This article first appeared in The Edge Financial Daily, on August 5, 2014.[/size]