Liannex’s stake buy in Icon Offshore a positive development
EARLIER in the week, Icon Offshore Bhd grabbed headlines when the story broke that its major shareholder, the government’s private equity (PE) fund Ekuiti Nasional Bhd (Ekuinas) is divesting most of its stake in the local offshore service vessels (OSV) provider.
The buyer is Singapore-based trading and logistics firm Liannex Corp (S) Pte Ltd, who set off a mandatory takeover of Icon when it acquired a 50.2% stake in the latter from Ekuinas on Tuesday.
The deal, done through Liannex subsidiary Liannex Maritime Sdn Bhd, was equivalent to the purchase of 272 million shares of Icon with a price of 63.5 sen a share.
Incidentally, Liannex and its Malaysian unit are owned by Yinson Holdings Bhd group executive chairman Lim Han Weng and his wife Bah Kim Lian and interestingly,
Lim is seeing potential in a company that Ekuinas has been keen to dispose of a significant portion of its stake.
The move by Lim and his Singapore firm has generally ignited positive comments from analysts, who by and large had resonated with Ekuinas chief executive Datuk Syed Yasir Arafat Syed Abd Kadir’s thoughts that the deal will translate to a win-win opportunity for both buyer and seller.
Maybank Investment Bank (IB) Research says the emergence of Liannex as a major shareholder in Icon Offshore will be a mid to long- term positive as there may be new strategies or innovations to grow the latter as an entity.
“This is given that the Lim family’s track record in managing and growing Yinson over the past decade,” it says in a research note to its clients.
On the other hand, it highlights that there is no immediate change in Icon’s fundamentals, until more details of the deal are revealed, while emphasising the key point that the group would need to win jobs from Petroliam Nasional Bhd’s (PETRONAS) new productions operations vessels programme for its 11 OSV vessels for it to enjoy higher daily charter rates (DCR).
Reiterating that it is basically “comfortable” with Icon Offshore, given its broadbased improvement across environmental, social and governance parameters and compliance with international standards, the research house is nonetheless maintaining a “hold” call on the stock with a target price of 71 sen.
“There are several risk factors that may impact our earnings estimates, target price and rating for Icon Offshore.
“They include severe decline in crude oil prices, the group not being able to secure contracts resulting in a decline in utilisation rates, and not being able to lock in higher DCRS for future jobs.”
Meanwhile, head of equity sales at Rakuten Trade Vincent Lau opines that the acquisition deal and the mandatory takeover are being carried out at an opportune time, coinciding with the recovery in DCRS for the industry.
He says the improvement in financial results for a host of other players in the sector such as Velesto Energy Bhd, Dayang Enterprise Holdings Bhd, and Perdana Petroleum Bhd is testament to the better outlook.
“Lim’s company Yinson is also in the Floating, Production, Storage, Offloading sphere, so the acquisition makes sense and we see Icon Offshore benefiting from this,” he says.
In response to queries as to the rationale for Ekuinas to dispose of Icon Offshore in light of the better prospects ahead, Lau reckons that the PE fund could be preparing itself for other investments.
Ekuinas chief executive Datuk Syed Yasir Arafat Syed Abd Kadir had on Tuesday said the fund manager has held on to the OSV entity for more than 10 years, with a cumulative realised gain of over Rm500mil derived throughout the holding period.
Echoing that comment, Lau says: “With the current good times in the sector, Ekuinas could feel that this is a good time to monetise its stake in Icon Offshore.”
Overall, he has a generally positive outlook on the O&G sector, adding that Main Board-bound Keyfield International Bhd is also being listed at the right time.
Lau’s mild optimism is mirrored by research house Apex Securities Bhd, which