Expecting Improvements From 2Q2016 Onwards

• Barakah Offshore has recorded a 91.1% drop in its 1Q2016 net profit to RM1.7 mln that fell significantly below our expectations. The substantial decline was attributable to the high revenue base recognition from its T&I project in 1Q2015 and completion of lower value work on its Pipeline and Commissioning Services in the quarter under review.
• Revenue for 1Q2016 fell by 45.9% Y.o.Y to RM103.3 mln, (1Q2015: RM191.0 mln), but came in slightly above our expectations. Nonetheless, the significant drop in revenue was due to the general slowdown in the oil and gas industry, which resulted in poor market sentiment that is permeating across both onshore and offshore supply and services companies.
• Meanwhile, the company’s net gearing in 1Q2016 remains manageable at 37.1% (4Q2015: 24.2%) owing to the ongoing balance sheet restructuring exercise. The management would continue its efforts to conserve cash and maintain a lean balance sheet structure under such difficult times.

Source: M+ Online Research - 26 May 2016