Friday, October 30, 2009

Scomi (RM0.565) may sell assets to raise RM350m

Scomi Group Bhd (7158)might sell some of its major assets to raise as much as RM350 million in cash, a research firm said."The company hinted about disposing of three of its twelve divisions but remained silent on possible candidates," analyst Kaladher Govindan wrote in a report for TA Securities after meeting company managers.

Scomi has debts of RM1.26 billion at the end of last year, and the sale could raise money for its capital-intensive rail business. "It is already negotiating with a few parties on some disposals that would help raise some cash to expand its monorail business," wrote Kaladher.

The assets that could be on the block are Scomi's 29 per cent stake in the Singapore listed CH Offshore Ltd, its machine shop business and its marine logistic business.The machine shop business helps provide support equipment for the oil and gas sector, while the marine logistics business help ferry coal from Indonesia for Tenaga Nasional Bhd, among others.

Meanwhile, Kaladher expects Scomi Engineering Bhd to be the main earnings driver for the group, driven by its public transportation business, as there are limited competitors for the monorail business. However, the research house is lowering its profit forecast for Scomi Engineering after capping full-year sales contribution from its Mumbai monorail project to RM235 million.

The figure is lower than the targetted RM315 million because the project is behind schedule. As such, TA expects Scomi to register a net profit of RM77.1 million for the year to December 31 2009, its lowest profit in five years. Scomi made a net profit of RM116.6 million in 2008, versus a net profit of RM257.1 million in 2007.

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