Three Handal shareholders accumulating shares in open market

THREE substantial shareholders of Handal Resources Bhd have been slowly accumulating shares of the company in the open market.

Sources say that something is brewing in the company that would see some changes in the board of directors of the company.

“The two new substantial shareholders of Handal could be looking for a board seat,” a source says.

Notably, shares in the oil and gas (O&G) services company have been gaining traction since April amid the emergence of two substantial shareholders, in the form of Borneo Seaoffshore Sdn Bhd and Chan Chew Leong, who is the group chief executive officer of Wah Seong Corp Bhd.

It is understood that Chan has been with Handal since the company was listed back in July 2009, owning just below a 5% stake in the company.

He first emerged as the substantial shareholder of Handal in May this year after buying 4.08 million shares that raised his stake to 7.5%.

Last week, Chan bought more shares in the company in the open market, and he now owns a 10.95% stake, or 17.48 million shares.

Meanwhile, Borneo Seaoffshore, which provides marine support vessel services in the O&G sector, emerged as a substantial shareholder in Handal this month after buying 11.7 million shares, or a 7.32% stake, in the company.

Last week, Borneo Seaoffshore bought more shares in Handal and currently owns about 7.36% stake.

The shareholders of Borneo Seaoffshore include Sunildeep Singh Dhaliwal, Tengku Munawir Islahuddin Tengku Noone Aziz and Mohamad Ismail.

Then there is Zahari Hamzah, who is an executive director of Handal.

He has been increasing his stake in the company this month to 9.68% from 9.53% in June.

Interestingly, the founder and executive chairman of Handal Datuk Mohsin Abdul Halim, as well as managing director and chief executive officer Mallek Rizal had told Bursa Malaysia on their intention to “deal in the securities of Handal during the closed period pending its second quarter result”.

Collectively, both of them own 20.51% stake in Handal.

In terms of order book size, Handal is sitting on RM170mil worth of jobs that could be recognised until 2020, mainly for the integrated offshore crane service.

In the O&G industry, Handal’s businesses are primarily related to regular operations and maintenance programmes.

So what are they vying over? Would the emergence of new substantial shareholders in Handal breathe new life into the company?

Amidst the emergence of the new substantial shareholders, Handal’s share price had been gaining momentum in the last two months, increasing more than 87% to hit an all-time high of 50.5 sen a share.

It is worth noting that that Handal has been a loss-making company in the past two years, amid the downturn in the O&G sector.

For the first quarter ended March 31, 2018, the company posted losses of RM0.95mil compared to a net profit of RM0.66mil a year earlier due to decrease in maintenance activities.

Its revenue for the quarter fell marginally to RM14.1mil from RM14.3mil previously.

Recently, Handal had entered into a technological collaboration with Petronas Research Sdn Bhd, the research and development arm of national oil company Petroliam Nasional Bhd (Petronas).

Handal said that Petronas Research has entered into an initial stage of technology collaboration with Handal Simflexi Sdn Bhd, a 51%-owned subsidiary of Handal, as well as given a letter of award for a joint development of subsea technology solutions.

Notably, both Wah Seong and privately owned Borneo Seaoffshore operate in the O&G sector as service providers.

Under the management helmed by Chan, 67, Wah Seong has been doing fairly well in comparison to its O&G peers, despite the downturn the industry faced in the last three years due to depressed global crude oil prices. Chan has been the group CEO of Wah Seong since 2002, and has a 7.8% stake in the group.

Wah Seong slipped into the red in 2016 before returning on the path of profitability last year.

For the first quarter ended March 31, its net profit tripled to RM29.3mil from RM9.5mil a year earlier. Its revenue for the quarter more than doubled to RM792.8mil from RM316.8mil previously.

Wah Seong says that the improvement in its topline and bottomline was driven by its project with Switzerland-based Nord Stream 2 AG to provide pipe-coating services.

At the moment, Wah Seong is sitting on an order book of RM2.5bil, of which 85% or RM2.1bil comes from the O&G sector. The remaining amount comes from its renewable energy business.

Investment , Handal