Investment Highlights

• We maintain our HOLD recommendation on Enra with an unchanged fair value of RM1.25 (Exhibit 1). We made no changes to our FY20–22F earnings forecasts.

• The acquisition of a 15-year-old oil and chemical tanker for US$9.3mil or RM38.9mil cash has been completed in January 2020. This acquisition is in line with the group’s strategy to expand its offshore services and enhance its capabilities in offshore oil and gas operations.

• With a net tonnage of 10,216 tonnes, the double-hull oil and chemical tanker will provide cost-effective storage and offloading solutions to oil and gas fields. This will enhance Enra’s competitiveness in pursuing new contracts in this core business area.

• On the property development division, Enra has sold all completed units in London, the UK. With cash proceeds of more than RM30mil, Enra is in a good position to grow its core energy services business while embarking on niche and quick-turnaround property development projects focusing on affordable landed properties in established townships in the Klang Valley.

• Enra is planning to undertake a lifestyle retirement home development in Caldecott Square, Rugby, the UK via a 51%- joint venture (JV). The proposed development comprises 71 units of extra care residences incorporating a central facility and 2 visitor suites. These will be built on 3 pieces of adjoining freehold land measuring 1.8 acres which the JV company acquired for £3.8mil (RM20.4mil) recently. The project has a GDV of £30.1mil (RM161.6mil).

• Meanwhile, management plans to cut its investment holding cost by 15–20% beginning FY20 which will enable it to mitigate the higher finance expenses.

• Enra's forward earnings will be driven largely by: (i) its US$48mil (RM210mil) 4-year contract (beginning April 2018) for the provision of condensate storing and offloading services to the Yetagun offshore gas field, off the coast of Myanmar; and (ii) the retirement home development in Caldecott Square, Rugby, the UK.

Source: AmInvest Research - 28 Jan 2020