WTK  Holdings  Berhad  (WTK)  has  proposed  the  acquisition  of  the  entire equity  interest  in  Alanya  Marine  Ventures  Sdn  Bhd  (AMV)  for  a  total consideration  of  RM94.6m.  The  purchase  will  be  satistied  via  cash  of RM38.3m  and  the  issuance  of  43.3m  of  new  shares  at  an  issue  price  of RM1.30. The principal activities of AMV are the provision of services related to  oil  and  gas  while  the  principal  activities  of  49%  associate  Nautical Returns  Sdn  Bhd  (NRSB)  are  providing  and  operating  offshore  support vessels, equipment and engineering consultation for oil and gas activities. (Source: Bursa Malaysia)

Comment: We think the proposed acquisition would allow WTK to diversify and venture into the oil and gas industry (via AMV’s interest in NRSB). With RM267.6m  cash  pile  as  at  end-Sep14,  the  cash  part  settlement  can  be absorbed by WTK. Pending management meeting, we maintain our FY14-16E  forecasts  as  well  as  our  BUY  recommendation  on  WTK.  Our  SOTP derived  target  price  is  also  unchanged  at  RM1.50,  based  on  10x  2015E EPS for its timber division and 1x P/BV for its forest plantation and palm oil.

Source: Affin Hwang Capital Research - 1 Dec 2014