Posted on August 14, 2012, Tuesday
KUCHING: Scomi Marine Bhd (Scomi Marine) is seen as a beneficiary of the group’s restructuring exercise with its share prices rallying after the recent weakness.
The research arm of Kenanga Investment Bank Bhd (Kenanga Research) stated, “With RM0.185 per share capital repayment safely in the bag, which is set to go ex-entitlement this coming Wednesday should lend a support base for the current share price level.
“The other proposed 1.61 billion new share issue at RM0.47 per share of Scomi Marine in exchange for the assets of Scomi Oilfields’ Eastern countries should also factor in.”
To recap, there were five steps under the restructuring exercise where, firstly, there would be US$57 million worth of equity disposal under the internal restructuring at Scomi Marine. With the proceeds, Scomi Marine would distribute RM0.185 per share share to all its shareholders.
Following that, the business of Scomi Oilfield Ltd (SOL), which is under Scomi Group (SGB), would be split into two groups to be divided geographically into Eastern Hemispheres (SOLEH) and Western Hemispheres.
A new company (Newco) would be set up in step three and it would take over Scomi Marine and assume its listing status. In step four, the Newco would acquire SOLEH and SGB’s Scomi SOSMA Sdn Bhd (SSSB) and Scomi KMC Sdn Bhd (SKMC). Lastly, SGB would offer the Newco shares to its existing shareholders.
With Scomi Marine paying 23 times financial year 2011 (FY11) earnings per share (EPS) for SOLEH and 6.8 times for SSSB, the research house said, “In our opinion, the acquisition prices are fair especially since SOLEH is one of the world class players.
“Based on pro-forma FY11 numbers, the enlarged Scomi Marine’s net profit will increase to RM65.5 million from RM28 million while the issued shares will rise to 2.34 billion shares from 733 million shares currently.
“Based on last Friday’s closing price, the enlarged market cap would be RM726 million, slightly higher than our previous estimate of RM640 million to RM710 million.”
The research house stated that, “Scomi Marine is likely to announce a weaker 2Q12 results vs. the RM16.4 million net profit reported in 1Q12 although we expect the overall number to be still likely within our FY12 net profit projection of RM29.1 million.”
Kenanga Research maintained a fair value of RM0.665 per share on a cum-cash distribution basis, based on 7.5 times calender year price earnings ratio, or at an ex-repayment fair value of RM0.48 per share.
