Eversendai raises stake in Technics

By Sharen Kaur
sharen@nstp.com.my
Published in NST on December 4, 2012

KUALA LUMPUR: Eversendai Corp Bhd, a structural steel turnkey and power-plant contractor, has raised its stake in Singapore-listed Technics Oil & Gas Ltd to 13.63 per cent, in a bid to strengthen its position in the oil and gas (O&G) sector. Just last Friday Eversendai said it bought 11.2 per cent stake in Technics for RM62.1 million using its IPO (initial public offering) proceeds. With the 13.63 per cent stake, Eversendai has invested a total of RM75.2 million in Technics. This is the first acquisition for Eversendai since its listing in 2011 and is part of a bigger plan to acquire different entities to add value and enhance its financial performance. "We will raise our stake progressively if the price is right. Technics is a strong dividend-paying company and its numbers will add value to us. "As time goes buy, we will buy companies which are inter-related to our core business, to enhance profitability," said Eversendai executive chairman and group managing director Datuk AK Nathan. Eversendai bought into Technics to secure stronger footing in the O&G fabrication sector. Nathan told Business Times that he expects Eversendai to venture into the O&G sector in Southeast Asia and the Middle East by the first quarter of next year and earnings to flow in from 2013. Eversendai recorded a net profit of RM83.25 million in its nine-month period ended September 30 2012, on revenues of RM746.91 million. The stock closed one sen lower yesterday at RM1.34. "Eversendai's expertise is towards highly complex steel fabrication works and mechanical erection works for plant construction. The topside for O&G structures consists of structural steel and mechanical works which fit into our business model. "What is lacking is the track record in the sector. By buying into Technics, Eversendai is instantly able to create a track record, and along with our expertise, we will be able to enhance our business opportunities in the sector in time to come," Nathan said. Technics designs and fabricates process modules and equipment, including gas compression packages, which are integrated to form the operating system for production operations and storage applications in both onshore and offshore O&G exploration and production activities. Its net profit recorded a four-year compounded annual growth rate of 51.9 per cent from S$3.8 million to S$20.2 million (RM9.46 million to RM50.30 million), underpinned by the buoyant O&G sector and lucrative contracts secured from oil majors like Keppel Fels, Chevron, Petronas, Emerson, Siemens, PetroChina and Worley Parsons. "If you look at O&G at large, there are phenomenal opportunities, especially in Southeast Asia and the Middle East. There is also huge oil findings in the African continent. "With Eversendai moving into that direction, it will contribute to our RM2 billion revenue target by 2017. With our strong presence in the Middle East, we will be able to grow the business in O&G in a much bigger way. Our infrastructure in the Middle East will complement the growth," Nathan said.