Mercury Securities - Carimin Petroleum Berhad

MERCURY SECURITIES
SDN BHD
IPO Report
28 October 2014
(A Participating Organisation of Bursa Malaysia Securities
Berhad)
MAIN MARKET
Oil & Gas
CARIMIN PETROLEUM BERHAD
Subscribe
“Initial Public Offering – Main Market”
BACKGROUND
Incorporated in 1989, Carimin Petroleum Berhad (Carimin) principally
involved in providing technical support services in the offshore oil and gas
(O&G) industry in Malaysia, predominantly in the provision of:
hook up and commissioning (HUC);
-
production platform system maintenance and upgrading services (PMUS);
-
inspection and manpower supply services
Carimin notable clients include Petronas Carigali, Shell, Murphy Oil, Talisman,
ExxonMobil, Newfield, and Petrofac. To date, Carimin has delivered more than
RM1bil worth of projects and services.
Carimin owns an anchor handling tug supply vessel (AHTS) namely Carimin
Airis which acquired in 2013 and an offshore accommodation workboat (AWB)
namely SK Deep Sea via 14.0% stake in SK Offshore. Both vessels are to
support internal offshore HUC & PMUS projects.
DETAILS OF IPO
The Carimin IPO at an issue price of RM1.10 per IPO share comprises offer for
sale up to 5.9 mil Offer Shares and Public Issue of 60.7 mil Issue Shares.
The Carimin IPO offered under the institutional and retail offering details as
follows:Issue
Shares
Offer
Shares
IPO
Shares
(mil)
*
51.9
22.2%
Institutional Offering
Identified Investors via private
placement
46.0
5.9
Malaysian Public via balloting
(ii)
Eligible directors and
employees
Total
RM1.10
Fair Value (FV)
:
RM1.31
FV Upside
:
19.5%
Issuer Manager
:
M&A
Securities
Sdn. Bhd.
Fund Raised (RM’mil)
:
66.77
Shares on Offer (mil)
:
5.89
New Shares (mil)
:
60.70
Closing of Retail Offering
:
29-Oct-14
Listing
:
10-Nov-14
Ordinary Share (mil)
:
233.88
Par value (RM)
:
0.5
Mkt Cap (RM’mil)
:
257.27
Est Free Float (%)
:
28.0%
POST LISTING
USE OF PROCEED (RM’mil)
Purchase of offshore
support vessel
:
35.32
Development of minor
fabrication yard
:
12.00
Repayment of bank
borrowings
:
8.00
General working capital
Estimated listing expenses
:
:
7.95
3.50
SUBSTANTIAL SHAREHOLDERS
Retail Offering
(i)
:
LISTING DETAILS
-
(i)
IPO Price
11.7
11.7
5.0%
3.0
3.0
1.3%
60.7
Notes:
BPB GROUP
* percentage calculated based on enlarged share capital upon IPO
5.9
66.7
Mokhtar Bin Hashim
:
31.8%
Cipta Pantas
:
17.4%
Platinum Castle Sdn Bhd
:
12.8%
Shatar Bin Abdul Hamid
:
6.9%
28.5
Prepared by:
Edmund Tham / Research Team
Mercury Securities Sdn Bhd
REVENUE STREAMS
As depicted in the graph below, main revenue contributors of Carimin are:
1. Offshore HUC & PMUS; and
2. Manpower supply services
During FYE 2014, offshore HUC & PMUS was the largest revenue contributor (64.77%), follow by manpower supply
services (35.08%) as shown in the graph below:
Revenue stream from manpower supply services has been consistent while revenue from offshore HUC & PMUS
appears uneven as it affected by the timing of work orders received and completion of HUC project.
The improved efficiency translate into improvement in profit margin for manpower supply services offshore HUC &
PMUS except for high GPM of 35.8% in FY2011 which was mainly due to extension of Talisman’s HUC contract
where associated costs were already incurred in FY2010.
2
Mercury Securities Sdn Bhd
OUTSTANDING WORK VALUE
Carimin has outstanding work value amount to RM900mil detailed as follows:-
FUTURE PLAN AND STRATEGIES
Carimin growth strategies are as follows:1.
Invest in new assets
-
Acquire new vessel to support in house HUC & PMUS operations (an AWB
namely Carimin Acacia scheduled for delivery in 2015)
2.
Enhance capability and
equipment
-
Upgrade fabrication yard, purchase new equipment to equip the yard and to
expand equipment rental services
3.
Develop new revenue
stream
-
To provide marine services to external customers with addition of new vessel
4.
Enhance operational
efficiencies
-
Deliver current outstanding work, remaining RM800mil worth of work orders
until 2018 efficiently
3
Mercury Securities Sdn Bhd
PROSPECTS
Carimin activities are focused on the upstream segment of the Oil and Gas industry in Malaysia. The prospect and
outlook of the Oil and Gas supporting services industry is expected to be generally favourable based on the following
factors:
1.
Performance of the oil
and gas industry
-
Overall performance of the Oil & Gas industry has shown positive growth which
will have direct impact on operators providing supporting services
2.
1.
Economic conditions
-
Malaysia economy grew by an AAGR of 5.7% between 2009 and 2013
3.
2.
Development of
marginal oil fields
-
Development of marginal oil fields would spur the growth in upstream activities.
-
Government had identified the development of marginal oil fields as one of the
strategies to combat decline in oil and gas in Malaysia and Petronas plans to
implement some measures to promote marginal oil field development.
Global market price of
hydrocarbon
-
In general, activity in Oil and Gas industry are affected by global market price of
hydrocarbon. Between Jan 2009 and July 2014, the global monthly crude oil spot
price index has increase by 148% to 111.4 points.
4.
3.
UTILISATION OF PROCEEDS
The total gross proceeds from the IPO of RM66.7mil to be utilised in the following manner:Estimated timeframe for
utilisation upon listing
RM’mil
%
Purchase of offshore support vessel
Within 12 months
35.32
52.9
Development of minor fabrication yard
Within 18 months
12.00
18.0
Within 6 months
8.00
12.0
Within 12 months
7.95
11.9
Within 3 months
3.50
5.2
66.77
100.0
Details of utilisation of proceeds
Repayment of bank borrowings
General working capital
Estimated listing expenses
Total gross proceeds
Most of the proceeds from IPO, about 70.8% or RM47.3mil will be used for the purchase of vessel and development of
minor fabrication yard to enhance marine services and minor fabrication capabilities.
DIVIDEND POLICY
Carimin has no dividend policy.
4
Mercury Securities Sdn Bhd
RISK FACTORS
Key risks are:-
Global economic slowdown
Sustained fall in the market price of hydrocarbon
Depletion of hydrocarbon resource in Malaysia
Change in Petronas’ policy
VALUATION/RECOMMENDATION
Carimin IPO price of RM1.10 per Share is priced at 11.75x PE based on pro-forma PAT of RM21.9mil for FYE 30
June 2014, represent pro-forma EPS of approximately 9.36sen and PB of 1.5x based on pro forma NA per Share of
RM0.73 after giving effect to the IPO and utilisation of proceeds.
We recommend investors apply for stock through the IPO based on Carimin proforma accounts, industry outlook and
our earnings forecasts. Our fair value estimate is RM1.31 per share based on our forecast FY2015 Earnings/Share and
an estimated P/E of 12x, 50% discount to the average peer’s P/E of 24.3x and P/B of 1.56x based on forecast FY2015
NA/Share of RM0.84.
Our positive view is underpinned by prospects for long-term growth for Oil & Gas services sector and committed
investment by Petronas to provide support for the oil & gas services industry.
Last price
@ 28 Oct 2014
Market Cap
(RM'mil)
P/E Circular
(ttw)
P/B
Net
Gearing
SapuraKencana Petroleum Bhd
3.39
6,084.7
13.91
1.9
6.41
Perisai Petroleum
1.10
6,591.4
37.74
1.3
0.19
Dayang Enterprise Holdings Bhd
2.99
3,566.3
16.42
3.4
0.31
Uzma Bhd
3.46
2,854.5
20.78
6.0
0.26
Petra Energy Bhd
2.61
614.6
-
1.7
1.37
TH Heavy Engineering Bhd
0.61
196.3
-
1.6
4.89
UMW Oil & Gas Corp Bhd
3.26
3,327.8
29.18
2.4
1.28
Tanjung Offshore Bhd
0.46
994.5
-
0.9
0.08
Alam Maritim
1.10
399.9
13.88
1.3
2.38
Dialog
1.64
1,516.1
38.20
5.2
5.58
24.3
2.6
11.75
1.5
Peers Comparison
Average
Carimin Petroleum Bhd
1.10
5
257.3
0.46
Mercury Securities Sdn Bhd
Financial Statement
Financial Data & Ratios
Growth (%)
FYE Jun (RM'mil)
2011A
2012A
2013A
2014A
2015E
Revenue
158.4
368.9
325.8
245.6
284.8
EBITDA
13.9
25.8
29.0
35.2
Operating Profit
12.7
23.3
25.3
PBT
12.6
23.3
9.5
Interest Exp
Taxation
Net Profit
Other Income
EPS (Sen)
FY Jun (RM'mil)
2012A
2013A
2014A
2015E
Revenue (%)
133%
-12%
-25%
16%
40.8
EBITDA (%)
86%
12%
22%
16%
30.1
34.2
Operating Profit
(%)
83%
9%
19%
14%
26.1
30.6
34.6
PBT (%)
84%
12%
17%
13%
16.8
19.5
21.9
25.6
Net Profit (%)
76%
16%
12%
17%
(0.1)
(0.4)
(0.3)
(0.2)
(0.2)
(3.1)
(6.5)
(6.6)
(8.8)
(9.0)
Profitability (%)
0.0
0.3
1.1
0.8
0.7
EBITDA Margin
7%
9%
14%
14%
4.07
7.18
8.34
9.36
10.96
Operating Margin
6%
8%
12%
12%
PBT Margin
6%
8%
12%
12%
5%
6%
9%
7%
28%
25%
29%
26%
NA per share (RM)
-
-
-
0.73
0.84
Net Margin
Gearing ratio
(times)
-
-
-
0.53
0.46
Effective Tax Rate
6
Mercury Securities Sdn Bhd
Recommendation Framework
Buy/Outperform
Neutral
The stock’s total return is expected to be +15% or better over the next
12 months.
The stock’s total return is expected to be within +/-15% over the next
12 months.
Sell/Underperform
The stock’s total return is expected to be -15% or worse over the next
12 months.
Trading Buy
The stocks total return is expected to be 10% or better over the next 3
months
Trading Sell
The stock’s total return is expected to be -10% or worse over the next 3
months.
DISCLAIMER
All information, views and advice are given in good faith but without legal responsibility. Mercury
Securities Sdn. Bhd. or companies or individuals connected with it may have used research material
before publication and may have positions in or may be materially interested in any stocks in the markets
mentioned.
For any enquiries, please contact us:
L-7-2,
No.2, Jalan Solaris,
Solaris Mont Kiara,
50480, Kuala Lumpur
Tel: 603-6203 7227
Email: [email protected]

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