Mainstream
Changing O&G fortunes
Stephanie Jacob 
The recovery in global oil prices has boosted the performance of many oil and gas players – Bloomberg
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THE collective oil and gas related fortunes of 35 industry tycoons have risen 13.7% to an impressive RM12.87 bil.

In this Focus List, the wealth of the top 10 tycoons alone stand at a total RM6.5 bil as at our cut-off date of Feb 12. This accounts for a little more than half of the total wealth on our list.

Oil prices began their recovery in August last year, but are still significantly lower than in June 2014 when the slump began.

Some market observers say it is unlikely that prices will cross the US$100 mark anytime soon, if ever again.

Even so, the prices are now the highest they have been in the past few years.

As of Feb 12, Brent crude was US$62.59 (RM244.57) per barrel, which is 116% higher than its lowest price of US$28.94 in five years on Jan 15, 2016. This has helped boost the share prices of many oil and gas companies.

 

Biggest gainer

The biggest gainer in terms of percentage growth is Hibiscus Petroleum Bhd’ managing director Kenneth Gerard Pereira, who has a 10.6% stake in the company.

Pereira’s 10.6% stake in Hibiscus jumped 86% in value, making him the biggest gainer on a percentage basis

The value of his interest jumped over 86% in the last six months, due to the rise in global oil prices. His stake is now worth RM133.2 mil as at Feb 12, versus RM71.6 mil six months ago.

 

Hibiscus’ share price appreciated 83.7% to 79 sen from 43 sen in the past six months. In its Q2 FY18, it recorded a pretax profit of RM9.7 mil compared with RM7.5 mil a year earlier.

Analysts are optimistic about its prospects. This comes as the deal to acquire a 25% operating interest in the 2011 North Sabah Enhanced Oil Recovery Production Sharing Contract (PSC) and a further 25% non-operating interest in the PSC from Shell Sabah Selatan Sdn Bhd nears completion.

“We remain positive on Hibiscus’ long-term prospects, given its ongoing initiatives to constantly increase production levels to enhance shareholder value. Our outperform call is affirmed,” a recent PublicInvest Research report says.

Second on the list is the 52-year-old managing director and group CEO of Serba Dinamik Holdings Bhd, Datuk Mohd Abdul Karim Abdullah.

His 22.9% stake in the company, which was listed in February last year, has now doubled in value to RM1.2 bil from RM642 mil six months ago.

This is a remarkable performance for the company as reflected in the sharp rise of its share price on Bursa.

Two other Serba Dinamik executives – director Abdul Kadier Sahib and executive director/deputy CEO Datuk Awang Daud Awang Putera – also gained big.

Abdul Kadier’s wealth from his 18.9% interest in the company increased to RM959.2 mil from RM529.5 mil in the last six months.

Meanwhile, Awang Daud’s 10.7% stake in Serba Dinamik took him to the fourth spot with RM541 mil from RM299 mil over the same period.

Serba Dinamik recorded an RM85.8 mil gross profit in its latest Q3 FY17. The figure is 77.3% higher than the RM48.4 mil seen in Q3 FY16.

Its share price is up 81.2% to RM3.46 from RM1.91 six months ago. The company recently announced that it secured a mix of seven contracts worth some RM830.9 mil. The news has been well received by the market.

“The announcement proves Serba Dinamik’s track record of operations and maintenance projects, both locally and internationally.

“We believe more awards will come for maintenance activities in Asean,” said RHB Research analyst Lim Sin Kiat in a recent report.

In fifth place is Wah Seong Corp Bhd’s chairman Datuk Seri Robert Tan Chung Meng, whose 41.6% interest in the company increased by 46.8% over the last six months to RM445 mil from RM302.8 mil in August last year.

Robert Tan's 41.6% interest in Wah Seong increased by 46.8% to RM445 mil from RM302.8 mil in August last year

 

With the oil price recovery, Wah Seong reported a profit before tax of RM42.6 mil in its Q3 FY17, reversing a RM23 mil loss incurred in its previous corresponding quarter.

Over the past six months, its share price rose 46.8% to RM1.38 from 94 sen.

Analysts believe the company should continue to see an earnings rebound as Wah Seong continues its recovery.

“We like Wah Seong as its earnings is secure until end-2019. Moreover, with more stable crude oil prices, demand for pipe-coating and engineering services for the O&G sector should improve going forward,” said Alliance DBS Research’s Inani Rozidin in a recent report.

Top individual gainers/losers

Top institutional gainers/losers


Dark clouds lift

Many oil tycoons are smiling again as the dark clouds slowly lift from the oil and gas sector.

Our list’s sixth spot belongs to T7 Global Bhd’s executive deputy chairman Tan Sri Tan Kean Soon. His 11.28% stake appreciated 45% to RM27.4 mil from RM19 mil six months ago.

This corresponded with T7 Global’s share price which strengthened 45% to 58 sen from 40 sen.

Sumatec Resources Bhd’s substantial shareholder Tan Sri Halim Saad takes the seventh spot.

His 16.02% stake is now worth RM47.7 mil – up 40% from RM34.1 mil six months ago.

However, despite the increase in trade volumes, the counter closed at seven sen on Feb 12 from five sen over the same period previously.

In the eighth spot is Dialog Group Bhd’s executive chairman Tan Sri Ngau Boon Keat, whose 20.37% stake in the company is now worth 35.9% more at almost RM3 bil.

In terms of the current value of his O&G related wealth, Ngau is the richest on our list.

Dialog’s share price rose 36% to RM2.61 from RM1.92 six months ago. In its Q2 FY18, Dialog recorded a pretax profit of RM186.4 mil – up 94.4% from the RM95.7 mil achieved in the previous corresponding period.

Well-known tycoon, T Ananda Krishnan is the second wealthiest in terms of the current value of his holdings in the O&G sector.

His 34.9% interest in Bumi Armada alone is worth RM1.6 bil (see Five wealthiest O&G tycoons).

Higher oil prices also saw institutional funds reaping good fortune. Pilgrim fund Lembaga Tabung Haji emerged the biggest institutional gainer among its peers.

Its 29.8% stake in TH Heavy Engineering Bhd increased in value by 90% to RM31.7 mil from RM17 mil in the past six months.

This corresponds to a doubling of the company’s share price to 10 sen from five sen over the same period.

TH Heavy also narrowed its losses before tax to RM36 mil in its Q3 FY17 from RM102.2 mil in the previous corresponding quarter.

Malaysia Hengyuan International Ltd Bhd comes in second on the institutional list as the value of its 51% stake in Hengyuan Refining Co Bhd jumped 68.4% to RM2 bil from RM1.2 bil six months ago.

Rounding up the top three is Petron Oil & Gas International which owns a 73.4% stake in Petron Malaysia Refining & Marketing Bhd. The value of its stake rose 22.3% to RM2.13 bil from RM1.74 bil six months ago.

 

Not all winners

However, not all oil tycoons gained despite higher oil prices. Three of Sapura Energy Bhd’s stakeholders saw their wealth decline significantly on paper.

Its president and group CEO Tan Sri Shahril Shamsuddin saw the value of his 7.44% stake dwindle more than half to RM303.2 mil from RM651 mil, over the past six months.

Sapura Energy’s director Datuk Shahriman Shamsuddin and businessman Tan Sri Mokhzani Mahathir also lost big on account of the company’s declining share price (see “Those who lost out”).

That said, the O&G sector is poised for a better year overall as the oil price recovery continues.

“We are turning optimistic on the direction of oil prices, and our average Brent crude oil price forecast for this year stands at US$60-US$65 per barrel,” says Alliance DBS’ Inani.

OCBC Bank economist Barnabas Gan concurs. He says that crude oil prices are ultimately headed for higher ground. He expects Brent prices to rise to the US$70 range by year-end.

Those who lost out

NOT all oil tycoons made handsome gains with the rise in the global crude oil price. In fact, three Sapura Energy Bhd shareholders lost the most in the last six months.

Its president and group CEO Tan Sri Shahril Shamsuddin and director Datuk Shahriman Shamsuddin have 7.44% and 6.82% interest in the company respectively.

In the last six months, the value of Shahril’s stake in the company was halved to RM303.19 mil on Feb 12.

The value of Shahriman’s interest in Sapura Energy also fell by RM318.68 mil. His interest in the company is now estimated to be worth only RM277.82 mil.

Another of the company’s main shareholders, Tan Sri Mokhzani Mahathir, who holds a 3.67% stake in Sapura Energy, had the value of his interest diminish to RM149.62 mil from RM321.25 mil over the last six months.

On Nov 7, Mokhzani ceased to be the substantial shareholder of Sapura Energy after divesting 384.97 million shares or 6.42% in the company.

For its Q3 ended Oct 31, the company plunged into the red with a pre-tax loss of RM209.72 mil from a pre-tax profit position of RM199.25 mil.

At Barakah Offshore Petroleum Bhd, its group president & CEO Nik Hamdan Daud came in fourth in the losers list.

Having a 52.01% stake in the company, the value of his stake plunged by RM128.95 mil or 53.1% to RM113.9 mil on Feb 12 from RM242.85 mil on Aug 11.

Other substantial losers include Tan Sri Bustari Yusuf and Datuk Mohamed Nizam Razak, who are both major shareholders of Petra Energy Bhd.

The value of Bustari’s 27.54% stake declined by RM25.63 mil or 28.16% to RM65.4 mil on Feb 12 from RM91.03 mil on Aug 11, last year, while Mohamed’s 9.11% stake was RM8.48 mil lower at RM21.65 mil from RM30.13 mil. 


Five wealthiest O&G players

Tan Sri Ngau Boon Keat, 69
Executive Chairman, Dialog Group Bhd

 
NGAU made the most in our list of oil and gas (O&G) gainers and losers. In the past six months, the value of his 20.37% stake (mainly via Azam Utama Sdn Bhd and Wide Synergy Sdn Bhd) in Dialog grew by 36% or RM792.36 mil to reach almost RM3 bil.

 

Just six months ago, his wealth from Dialog was said to be worth RM2.2 bil.

Dialog’s core business is the provision of integrated technical services for upstream, midstream and downstream sectors in the O&G and petrochemical industries.

The company is also involved in the construction of petroleum storage facilities for the Refinery and Petrochemical Integrated Development project in Pengerang, Johor.

For its Q1 ended Sept 30, the group’s profit before tax more than doubled to RM186.36 mil from RM95.66 mil in the preceding corresponding quarter.

Ngau is reported to be confident of maintaining Dialog’s double-digit growth in FY18.

Having co-founded the group in 1984, he has served as executive chairman since 1999 and was ranked 33th on Forbes’ 50 richest Malaysians in 2017.

He is also the founder and trustee of MyKasih Foundation, a non-profit organisation that provides food aid, health awareness and financial literacy programmes, children’s education, and skills training to the less fortunate.

Ngau has a bachelor’s degree (Hons) in Mechanical Engineering and obtained an Honorary Doctorate in Engineering from the University of Canterbury, New Zealand.

He began his career as a refinery engineer at Mobil Singapore Pte Ltd in 1972. Before founding Dialog, he worked at Petronas from 1975-1980 where he held various engineering-related positions.

 

Lim Han Weng, 65
Group Executive Chairman, Yinson Holdings Bhd

 
LIM is Yinson’s largest shareholder with a 25.04% interest. The value of his stake in the group grew by RM160.51 mil or 17.14% to RM1.12 bil on Feb 12 from RM953.8 mil on Aug 11, last year.

 

For its Q3 ended Oct 31, the group’s profit before tax soared 37.84% to RM106.74 mil from RM77.44 mil in the preceding corresponding quarter.

The company is optimistic of achieving satisfactory results for the financial year ending Jan 31, even though the short-term to medium-term outlook for the oil and gas sector remains uncertain.

Lim was ranked 42th on Forbes’ 50 richest Malaysians in 2017 with total net worth of about US$290 mil (RM1.14 bil).

He founded Yinson in 1983 as a transport agency in Johor Bahru, Johor, with business interests in logistics and commodity trading.

Lim became chairman in 2009 after acting as managing director since 1993. His wife Bah Kim Lian is the group’s executive director, while son, Chern Yuan, is executive director and group CEO.

Yinson was listed on Bursa Malaysia on July 11, 1996. By 2007, it became a leading transport company with a fleet of 365 trucks. It ventured into oil & gas in 2011 by entering into a consortium agreement with the PetroVietnam Technical Services Corporation.

The joint venture was subsequently awarded a contract to provide a floating storage and offloading vessel.

In 2016, the group disposed all of its non-oil and gas businesses to focus on becoming a full-fledged floating production storage and offloading company.

 

Tan Sri Syed Mokhtar Albukhary, 66
Controlling shareholder, Gas Malaysia Bhd

 
SYED Mokhtar has a 30.93% interest in Gas Malaysia via Anglo-Oriental (Annuities) Sdn Bhd.

 

Over the past six months, the value of his stake dropped by RM103.27 mil or 8.78% to RM1.07 bil on Feb 12 from RM1.18 bil on Aug 11.

He was ranked 10th on Forbes’ 50 richest Malaysians in 2017 with an estimated total net worth of US$1.8 bil (RM7.1 bil).

Gas Malaysia is involved in the sale, marketing and distribution of natural gas to industrial, commercial, and residential sectors. It also builds and operates the natural gas distribution system in Peninsular Malaysia.

For its Q3 ended Sept 30, the group’s profit before tax fell RM103.27 mil or 8.78% to RM55.27 mil on Feb 12 from RM55.6 mil on Aug 11.

Publicity-shy Syed Mokhtar also owns controlling stakes in the listed DRB-Hicom Bhd and MMC Corp Bhd.

DRB-Hicom is a diversified group involved in the automotive, financial services and property sectors, while MMC Corp is engaged in power generation, construction, mining and mineral exploration.

He founded Albukhary International University (AIU) which is located within the Sharifah Rokiah Centre of Excellence.

The centre is named after his mother and is spread over a 30.35ha site in Alor Setar. It provides full tuition to financially needy students.

 

T Ananda Krishnan, 79
Controlling shareholder, Bumi Armada Bhd

 
TYCOON T Ananda Krishnan is second on the list of oil and gas (O&G) tycoons.

 

He controls Bumi Armada with a 34.92% stake held via his investment vehicle Objektif Bersatu Sdn Bhd.

The value of his 34.92% stake in Bumi Armada appreciated by RM256.04 mil or 18.38% in the last six months to reach RM1.65 bil on Feb 12 from RM1.39 bil on Aug 11, last year.

Bumi Armada is a Malaysia-based international offshore energy facilities and services provider with a presence in over 17 countries.

It provides offshore services to the oil and gas industry in Malaysia and other countries in Asia.

For its Q3 ended Sept 30, the group returned to the black with a profit before tax (PBT) of RM152.33 mil from a loss before tax of RM83.02 mil in the same quarter previously.

For the next quarter, the management expects to see further developments in its floating production storage and offloading projects, which should be positive for the group’s floating production and operation business revenue this year.

Ananda Krishnan was ranked third on Forbes’ 50 richest Malaysians in 2017, and 219th among the world’s billionaires with an estimated total net worth of US$6.5 bil (RM25.72 bil).

Apart from Bumi Armada, he owns a controlling stake in other listed companies, including telco giant Maxis Bhd and media entertainment company Astro Malaysia Holdings Bhd.

He is also involved in the power, gaming and leisure sectors.

 

Datuk Mohd Abdul Karim Abdullah, 52
Group MD/ Group CEO, Serba Dinamik Holdings Bhd

 
A NEW entrant, Mohd Abdul Karim is Serba Dinamik’s largest shareholder. His 22.87% stake makes him the third wealthiest individual on our list.

 

In the last six months, the value of his stake in Serba Dinamik increased by RM520.6 mil or 81.15% to RM1.16 bil on Feb 12 from RM 641.51 mil on Aug 11.

Serba Dinamik is mainly engaged in the provision of engineering solutions. The company recently expanded its IT division’s capabilities to capture new revenue streams in the e-health sector.

The company offers operation and maintenance, system integration, training, civil works, planning, procurement, construction, and commissioning services.

It was listed on Bursa on Feb 8 last year with an initial public offering price of RM1.50 per share. For its Q3 ended Sept 30, the group’s profit before tax rose 77.31% to RM85.79 mil from RM48.38 mil in the same quarter last year.

On Feb 6, the group announced it had entered into a memorandum of agreement (MOA) with Maju Holdings Sdn Bhd to acquire the 40% stake held by the latter in Maju Renewable Energy Sdn Bhd, Maju RE (Talang) Sdn Bhd and Maju RE (Temenggor) Sdn Bhd.

Serba Dinamik says the MOA would help create opportunities for the company to bid for engineering, procurement, construction and commissioning contracts for power plants on a turnkey basis.

 



This article first appeared in Focus Malaysia Issue 273.