New lease of life for Tatt Giap
Existing businesses of Dynaciate may be injected into the loss-making firm
PETALING JAYA: Dynaciate Engineering Sdn Bhd has emerged as a substantial shareholder in Tatt Giap Group Bhd after acquiring 22.1 million shares, or a 12.95% stake, in the company via a direct business transaction. The off-market deal occurred last Friday. In a filing with Bursa Malaysia, Tatt Giap said Khoo Song Heng and Woon Kok Kee have also emerged as substantial shareholders in the company by virtue of their shareholdings in Dynaciate.
Khoo is currently the managing director of Dynaciate while Woon is executive director.
With this announcement to Bursa, it would appear that Dynaciate was also the likely party who took up the off-market block of shares last Thursday.
On Thursday, some 24.26 million shares, or 14%, of Tatt Giap shares were crossed via direct business transaction at 31 sen. This is a 32.25% premium over Tatt Giap’s closing price of 21 sen last Friday.
Should Dynaciate be the same party that took up the Thursday block, this would mean that it will end up with a 26.95% stake and be the new controlling shareholder of the company.
Last Friday, in response to an unusual market activity query, Tatt Giap said the rise in its price was most likely due to the RM67mil contract that was awarded to its wholly owned subsidiary, Superinox Pipe Industry Sdn Bhd, on Oct 31, and the emergence of new substantial shareholders.
Assuming Dynaciate is the new controlling shareholder of Tatt Giap, it is likely that some of its existing businesses will be injected into Tatt Giap, and the loss-making company could be given a new lease of life.
The RM67mil contract secured by Tatt Giap is likely a precursor – this contract was secured from Dynaciate, and it was to undertake sub-contracting works which involved civil, architectural and piping prefabication in Johor.
This is beyond Tatt Giap’s job scope, as the company is mainly an importer and stockist of stainless steel materials.
Based on information from its website and various public domains, Dynaciate Engineering and its subsidiaries started business back in 2002 where its initial activity was providing minor repair and maintenance of piping system and structures, including the supply of pipes.
Woon was one of the original founders of the group, while Khoo joined in 2010.
Since those early days, Dynaciate has expanded and evolved to now becoming an engineering and construction group specialising in the construction of plants and facilities for the oil and gas and refining, chemical and chemical products, oleo chemical as well as food processing industries.
While the company started its business in Johor, it has expanded its customer base to Pahang and Singapore over the last six to seven years.
For the past three years, its revenue from plant and facility construction has grown rapidly, thanks to its maiden contract from Petronas’ Refinery and Petrochemical Integrated Development (Rapid) project in Pengerang, Johor.
This was because in 2015, Dynaciate got its first big break when it won its first Rapid contract. The project was secured from an engineering and main contractor company for the design, supply, construction and commissioning of nine blocks of labour accommodation package for Rapid. The project commenced in 2015 and was completed in 2016.
Another key Rapid project Dynaciate secured was the construction of foundation works for refinery tank farm valued at about RM100mil from an Indian engineering company in 2016.
Since then, Dynaciate has obtained an additional four contracts from the Rapid project with a contract value of about RM500mil.
A listed equivalent of Dynaciate could be Dialog Group Bhd, as the company is deriving its lion’s share of revenue from the oil and gas and refining division, followed by chemical and chemical products.
Worker accommodation and facility construction are presently another large contributor.
Contracts aside, the main assets in the company are likely its two fabrication centres in Pasir Gudang and Gebeng, Pahang.
As the company started securing turnkey contracts, which were EPCC (engineering, procurement, construction and commissioning) in nature, there was a need to own its own fabricating facilities.
The Pasir Gudang Fabrication Centre kicked off in 2012 with a covered area of 6600 sq m and four fabrication bays. It has since expanded with another four bays and now has a total covered area of 8,300 sq m.
Meanwhile, Dynaciate set up its second fabrication centre in Gebeng, Pahang, as it started to get contracts from the East Coast. In 2015, it purchased a 3.5 acres land with two fabrication bays of about 4,000 sq m (Gebeng Fabrication Centre) in the Gebeng Industrial Area.
As of mid-2017, its fabrication capabilities in Pasir Gudang and Gebeng have a combined covered areas of 20,000 sq m and 4,000 sq m, respectively.
With the expansion of its fabrication bays, Dynaciate has been exporting its fabricated steel products such as pipe spools, steel structure, skids and static equipment to Brunei, Thailand, Singapore, Taiwan and South Korea.
Dynaciate currently operates from its head office in Pasir Gudang, Johor, coupled with three fabrication and operational centres in Pasir Gudang, Gebeng, Pahang and Singapore.
Its major customers include Hyundai Engineering, BASF Kaneka, Tecnimont Italy and Punj Lloyd India.