EA Technique down 25.4% on debut amid weak market sentiment

PETALING JAYA: Marine vessels operator EA Technique (M) Bhd suffered a 25.4% or 16.5 sen drop in its share price on its maiden trading day on the Main Market in line with the overall market that dropped by 20.95 points or 1.19%.

Investors sold oil and gas stocks as Brent crude oil fell below US$65 per barrel while the FBM Kuala Lumpur Composite Index fell in tandem with regional markets.

The company, which also provides marine transportation, offshore oil and gas storage and port marine services, said it would utilise the funds raised from its initial public offering (IPO) of RM74mil to expand its fleet as well as construct a new dry dock at its shipbuilding facilities in Hutan Melintang, Perak.

In a report, TA Securities said the company owned 23 vessels, of which seven were oil and gas tankers, two offshore support vessels and 14 marine support vessels. It also charters nine marine vessels from external parties.

According to Bernama, its managing director Datuk Abdul Hak Md Amin said the company was converting an oil tanker into a floating storage and offloading vessel (FSO) next year and upon completion, the FSO would contribute some RM140mil (US$40mil) to its revenue over the next four years.

He expected conversion of the FSO to be completed next April.

In a statement, the company said it would use RM30mil from the IPO to repay loans and RM29.2mil for its capital expenditure.

The company issued 114 million new shares at 65 sen each, which would give it a market capitalisation of RM327.6mil but weak market sentiment coupled with low oil prices sent it down to RM244.4mil as the stock closed at 48.5 sen.

Its managing director Abdul Hak Amin is a major shareholder, owning 18.04% in the firm.

For its third quarter ended Sept 30, revenue improved 8.11% to RM37.83mil from a year ago.

Net profit for the quarter fell from RM8.17mil last year to RM4.78mil.

In the first nine months, it registered RM113.5mil in revenue, a jump of 29.42%, compared with RM87.7mil due to improved marine transportation and offshore operations as well as port marine services operations.

Its pre-tax profit declined to RM13.3mil compared with the preceding corresponding period of RM55.5mil mainly because of higher pre-tax profit recorded in the previous year due to a divestment gain of RM37.5mil.