Kejuruteraan Samudra Timur gets 3-year contract from Talisman

KUALA LUMPUR (April 13): KEJURUTERAAN SAMUDRA TIMUR BHD [] has secured a three-year contract from Talisman Malaysia Ltd for the provision of tubular handling equipment and services (“the Contract”) for a period of three (3) years effective from 9 April 2012 until 8 April 2015, with one (1) extension option of one (1) year.

In a filing on April 12, KSTB said that there was no indication on the value of the Contract in the award and it was subjective depending on the activities level by Talisman throughout the contract period.

It said the contract was expected to contribute positively to its future revenue and earnings.



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Samudra may divest loss-making rig segment

KUALA LUMPUR: Oil and gas services provider Kejuruteraan Samudra Timur Bhd may divest part of its land drilling rig services business in an effort to bring the company back into the black.

“We are open to the idea. If anybody can come in and help us secure contracts, we are willing to reduce our shareholding [in this segment] provided they take the driver’s seat in some sort of partnership with us,” said executive director Darmendran Kunaretnam after the company AGM yesterday.

The company’s land drilling rig services segment has been plagued with low revenue contribution and high maintenance costs, with the division’s loss after tax deeping to RM16.15 million in FY11 from a loss of RM12.69 million the year before, according to its annual report.

It contributed to the company’s total net losses, which widened to RM14.81 million for the financial year ended June 30, 2011, from a net loss of RM13.71 million in FY10.

Samudra operates two land rigs in Indonesia, Ikhlas 2 and Ikhlas 3, which are rated 750HP and 1,000HP, according to its latest annual report.

Ikhlas 3 was contracted to service a drilling programme of two exploration wells in East Kalimantan under an exploration project of a local oil corporation in Indonesia. Samudra noted in the annual report that the operation under this contract “went through tremendous challenges during mobilisation of the rig to the well location as a result of undesirable weather and road conditions”.

Kunaretnam: It is apparent to any analyst that this segment has been dragging us down.

“It is apparent to any analyst that this segment has been dragging us down, so we want to make sure that the party we are talking to [for the potential divestment] is much better in securing [long-term] contracts [of more than two years] so we can reduce our uncertainty in this area,” said Kuneratnam.

He said there have been interested parties for the majority stake in the segment, which carries RM85.05 million in assets against RM113.42 million in liabilities.

He added that any gain from the divestment would go towards paring down the company’s debt, which is its main priority at this stage.

As at Sept 30, Samudra had net debt of RM88.47 million, some 3.5 times its shareholders funds of RM25.24 million. Its net assets per share stood at 17.6 sen.

“We had earlier identified our borrowing costs, which were as high as RM10 million four years ago, and we have brought this down to about RM6 million. Our immediate target is to further reduce this, it would be good if we could halve the current amount,” Kunaretnam said.

He added that the debt payments have been depleting the company’s operating cash flow, which has become a hindrance for investment.

The company generated RM8.802 million in operating cash flows last year, of which RM5.34 million went towards interest payments.

“If we manage to pare down debt we will have free cash flow, and would be able to look into expanding or [going into] revenue-generating areas,” he said.

The company has been in a loss-making position for the past five years, mainly due to its land drilling rig services segment.

For its 1QFY12 ended Sept 30, the company registered a net profit of RM3,000 compared to a net loss of RM3.05 million in the previous year while revenue more than doubled to RM34.4 million from RM14.6 million. The improved performance was due to better earnings from its tubular handling services segment, which saw profit increase 630% to RM4.9 million from RM0.67 million a year ago on the back of higher work orders.

However, Kunaretnam asserts that the high growth for its tubular handling segment during the quarter was “an exception”.

Profit from its inspection and maintenance services fell to RM0.24 million from RM1.59 million the year before, while its land rig services and pipe threading services segments both recorded losses totalling RM2.59 million. The stock was untraded at 14 sen yesterday. It has lost about a third of its value year-to-date.


This article appeared in The Edge Financial Daily, December 21, 2011.



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Kejuruteraan falls on Bursa rejection

Kejuruteraan Samudra Timur Bhd, a Malaysian oil and gas services provider, fell in Kuala Lumpur trading after the stock exchange rejected its request for more time to submit its earnings report.

The stock fell 4.4 percent to 11 sen at 9:13 a.m. local time, set for its lowest close since Oct. 18. -- Bloomberg

Stocks to watch: Ramunia, Hirotako, Faber, Samudra

KUALA LUMPUR: Stocks could give up some of the gains on Friday, Oct 28, ahead of the weekend after chalking up strong gains in the holiday-shortened week.

However, a firmer overnight Wall Street could help continue to underpin investors’ confidence after the deal struck by euro zone leaders on Greece's debt burden.

On Wall Street, stocks surged 3 percent on Thursday as an agreement by European leaders to help contain the region's two-year debt crisis lifted a cloud hovering over markets.

Optimism that a deal would be struck to prevent widespread financial distress fueled the market's rebound in October. The S&P 500 is up more than 13 percent this month, on pace for its biggest monthly gain since October 1974.

But some traders said implementing the agreement will present major challenges, observing that the devil is in the details.

The Dow Jones industrial average was up 339.51 points, or 2.86 percent, at 12,208.55. The Standard & Poor's 500 Index was up 42.59 points, or 3.43 percent, at 1,284.59. The Nasdaq Composite Index was up 87.96 points, or 3.32 percent, at 2,738.63.

Fund buying pushed the FBM KLCI towards a near two-month high, as the 30-stock index closed up 13.13 points or 0.90% to 1,470.93 – the best performance since Sept 2.

The euro and European stocks rallied after European leaders struck a deal to provide debt relief for Greece, but analysts warned the plan would fail to halt the euro zone's two-year-old debt crisis unless crucial details were resolved soon, Reuters reported.

The firmer crude palm oil prices could underpin sentiment in PLANTATION [] stocks while the surge in oil could support rising interest in oil and gas stocks.

Glove manufacturers including Supermax Bhd could see continued interest as it benefits from the falling latex prices.

IOI Corp and Dutaland could also see heavy trading interest following the on-going dispute over IOI’s decision to terminate the agreement to acquire plantation land from Dutaland for RM830 million.

Among the other stocks to watch are Ramunia after its unit was awarded a contract from Petrofac (Malaysia PM-304) Ltd to supply driven piles for the Cendor phase 2 development project.

The contract value is RM13.13 million and the duration of the contract is 23 weeks. Ramunia expects the contract to contribute positively towards the earnings for the financial period 2011-2012.

Auto parts manufacturer MBM RESOURCES BHD [] has made a takeover offer for HIROTAKO HOLDINGS BHD [], which makes car safety restraint equipment, offering 97 per share, which is nine sen above the pre-suspension price of 88 sen.

Hirotako said it had received a notice of conditional take-over offer from AmInvestment Bank Bhd on behalf of MBM Resources.

MBM Resources was offering 97 per share for all the voting shares of 25 sen each in Hirotako and 5.0 sen per warrant.

The federal government has extended FABER GROUP BHD []’s hospital support services concession for an interim period of six months, starting Friday, Oct 28.

Its unit Faber Medi-Servce Sdn Bhd had received a letter from the Public Private Partnership Unit of the Prime Minister's Department about the extension of the contract.

Faber said the extension was subject to the prevailing terms and conditions of the concession or until the signing of a new concession agreement for the privatisation of services with the Health Ministry, whichever is the earlier.

Bursa Malaysia Securities Bhd rejected KEJURUTERAAN SAMUDRA TIMUR BHD []’s application for more time to submit its audited statements for the financial year ended June 30, 2011.

The company said Bursa had informed it of the rejection in a letter on dated Thursday, Oct 27.

Bursa Securities rejects Samudra’s bid for more time

KUALA LUMPUR: Bursa Malaysia Securities Bhd has rejected KEJURUTERAAN SAMUDRA TIMUR BHD []’s application for more time to submit its audited statements for the financial year ended June 30, 2011.

The company said Bursa had informed it of the rejection in a letter on dated Thursday, Oct 27.

Samudra had on Oct 19 announced it had submitted an application to Bursa Securities for an extension of time to announce/submit the audited financial statements.

It posted net loss of RM14.80 million on back of RM68.08 million in revenue for FY end June 30, 2011. It was also in the red, recording losses of RM13.71 million on the back of revenue of RM60.04 million in FY10.