• search

Array

By Staff
Subscribe to Oneindia News

KUALA LUMPUR, Apr 18 (Reuters) Malaysian oil and gas services firm Sumatec Resources Bhd expects net profit and revenue to double this year as it builds its shipping business and ventures into mining, its managing director said on Tuesday.

Sumatec, which listed on the Malaysian stock exchange in 2003, plans to increase operations in Africa and expand in mining, lured by a boom in commodities.

Higher revenue could boost net profit to 15 million to 20 million ringgit from 8.6 million last year, James Chan told Reuters in an interview.

''With shipping and mining, we're looking at 250- to 300- million-ringgit turnover. This year should be better,'' Chan said.

Sumatec posted revenue of 137.2 million ringgit ($37.4 million) in 2005.

In the longer term, Sumatec also aims to boost its revenue to one billion ringgit, with the acquisition of construction firm Setegap Bhd ''I think we can achieve one billion ringgit turnover in two to three years, once Setegap is in, mining is on and shipping expanding. With proper management, we can expect a 300- to 500- million ringgit turnover from Setegap,'' Chan said.

Under a restructuring exercise, a Sumatec unit will emerge as the new major shareholder of Setegap, with a 52.3 percent stake.

The deal is expected to be completed in nine to 12 months.

Sumatec, which has 300 million ringgit worth of contracts in the core oil and gas business, is bidding for an 800-million ringgit contract to build onshore gas facilities in Turkmenistan, Chan said.

''We are active in Sudan, Vietnam, Chad and Cameroon, and we are also looking at Angola, Senegal and Ghana,'' he said.

Sumatec, which counts Dialog Group Bhd among its competitors, now derives more than 60 percent of its revenue from the oil and gas sector.

But by 2007, the sector would account for 40 percent of revenue while shipping and mining would contribute 30 percent each, Chan said.

Sumatec aims to broaden its involvement in overseas projects through Setegap, as the boom in the oil and gas industry in Africa and the Middle East have propelled the demand for infrastructure facilities there.

Sumatec, which owns seven ships with a total capacity of 40,000 tonnes, is in the midst of buying another 7,000-tonne vessel from China.

''We are moving toward doubling our tonnage,'' Chan added.

Sumatec ships oil products from refineries to terminals for clients including Shell and ExxonMobil on long-term charter, offering a stable income stream to the firm.

Competition in this business is small and limited to companies such as Malaysian Merchant Marine Bhd, because the provision of product tankers require sizeable capital. Sumatec also plans to start mining for gold and copper in Malaysia's eastern states of Terengganu and Pahang this year to take advantage of high prices.

The first gold bar is expected by May while copper production will commence in July, Chan said, adding that the firm targets annual production of 700 kg of gold and 4,000 tonnes of copper.

Sumatec shares are trading below their one ringgit par value. The stock hit 3.0 ringgit on its market debut in September 2003, at the height of an oil and gas sector rally.

It traded at 0.745 ringgit on Tuesday.

''The stock is undervalued,'' Chan said. ''A fair price, I would say, is at least 1.50 to 2 ringgit. When it comes to funding, we find it difficult because it's below par.'' ($1=3.67 ringgit) REUTERS PV SND1433

For Breaking News from Oneindia
Get instant news updates throughout the day.

X
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Oneindia sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Oneindia website. However, you can change your cookie settings at any time. Learn more