Maintain BUY; Transformation Plan in Motion

EA Technique (M) Berhad (EATech) has just received unanimous shareholder approval for a major regularisation plan, signalling a transformative phase for the company. The plan includes issuing up to 795,750,000 new ordinary shares, raising RM79.6 million to bolster its financial position. This move is a significant step in EATech’s strategy to strengthen its balance sheet and drive future growth.

Strategic Investment. The new shares will see Voultier Sdn Bhd (VSB) becoming the largest shareholder with a 51% stake. VSB is jointly owned by industry veterans Datuk Wira Mubarak Hussain Bin Akhtar Husin and Dato’ Lai Keng Onn. Their entry is expected to bring valuable resources and expertise to EATech, marking a new era of growth and stability for the company.

Financial Impact. The regularisation plan is set to significantly improve EATech’s financial health. The company expects to recognize a one-off net income of approximately RM127.4 million due to debt waivers, which will boost net tangible assets from RM57.4 million to RM261.6 million. This financial turnaround positions EATech well to capitalise on future opportunities, especially with PETRONAS planning significant investments in exploration, development, and production.

Operational Strength. EATech operates a diverse fleet of 26 vessels, including product tankers, offshore support vessels (OSVs), and a floating storage and offloading (FSO) vessel. These assets are crucial for transporting petroleum products, light cargoes, and personnel, under various charter arrangements. The enhanced financial position will enable EATech to maintain and potentially expand its fleet, ensuring it meets the growing demands of the marine transportation and offshore storage sectors.

Market Outlook. With the new strategic investment and regularisation plan, EATech is well-positioned to benefit from increased demand for its services. The company’s focus on efficiency and strategic growth aligns with broader industry trends and PETRONAS’s planned investments, creating a favourable outlook for the future.

We maintain a BUY recommendation on EATech, given its strong strategic direction, improved financial health, and the robust backing of its new major shareholders. The company is on a clear path to achieving its growth objectives, making it a compelling investment opportunity in the marine transportation and offshore storage sector.

Key Risks. Potential risks include fluctuations in marine transportation demand, changes in regulatory environments, and unexpected operational challenges. However, with the strategic backing of VSB and a clear focus on financial and operational efficiency, EATech is well-equipped to navigate these challenges.