GROUP: Strategic Asset Disposal Fuels Growth and Financial Resilience
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A recent strategic move by the company, involving the disposal of its DP-2 Accommodation Workboat (AWB) Kayra for USD22 million (RM93 million) in cash to MAG Offshore Investments LLC, is poised to complete by December 2025. This transaction underscores a disciplined capital recycling strategy aimed at enhancing financial robustness and paving the way for future growth.
Strategic Fleet Management
The sale of AWB Kayra validates management’s commitment to its capital recycling playbook. By actively trimming its fleet of ageing Offshore Support Vessels (OSVs), the company is not only fostering a leaner operational structure but also effectively mitigating the higher survey and maintenance burdens typically associated with older vessels. This proactive approach strengthens balance sheet discipline and accelerates the strategic pivot from reliance on cyclical OSV operations towards more diversified and structurally growing markets.
Enhanced Financial Flexibility
Including this latest disposal, the company has accumulated a significant RM186 million in proceeds from its year-to-date asset disposal exercises. This sum represents approximately 24% of shareholder equity and 8% of market capitalization, substantially bolstering financial flexibility. The substantial cash influx supports early debt prepayment and positions the company with a stronger net cash position, projected to reach RM570 million by FY25F (assuming full-warrant conversion). This robust financial standing provides ample firepower to fund new, higher-growth ventures.
Future Growth Initiatives
The company’s future growth strategy is focused on two key areas. Firstly, it plans to enter a new energy services joint venture, offering a strategic entry point into the robust regional energy market. Secondly, a long-term transformation is envisioned to evolve the company into a regional power and infrastructure contractor, capitalising on opportunities presented by the Asean Power Grid. These initiatives are expected to be key differentiators compared to its OSV industry peers.
The investment bank maintains a BUY recommendation on the stock, citing the significant upside optionality arising from these strategic transformations.
