It was once an oil and gas darling in the early 2000s under then CEO Shah Hakim Zain and his partner Tan Sri Kamaluddin Abdullah. Barely a year after its debut on Bursa Malaysia in May 2003, the stock was trading close to the RM20 level because of its potential from new contracts as well as mergers and acquisitions.
Today, it is saddled with long-term borrowings of RM119.84mil and short-term borrowings of RM566.09mil. The company is also cashflow negative, with a deficit of RM25.98mil as of Dec 31, 2018.
For the nine months period to Dec 31, 2019, total losses stood at RM75.55mil on the back of RM421.97mil. Losses in the previous year stood at RM90.58mil on the back of RM571.7mil in revenue.
To make matters worse, on Feb 13, Scomi told Bursa Malaysia that it had defaulted and received a notice of demand from Malayan Banking Bhd for RM201.91mil.
The default arose due to the failure by Scomi Rail Bhd (SRB) to pay Maybank under the bank facilities granted to the company.
SRB is a wholly-owned subsidiary of Scomi Engineering Bhd, which in turn is a wholly-owned subsidiary of Scomi Group.
Scomi Group also received a notice of demand from Maybank amounting to RM113.96mil, due to Scomi Rail’s default.
As of Scomi’s announcement on April 8, Maybank has granted the group a further extension of time until April 22.
But all is not lost.
On April 4, Scomi Group announced that it had settled a dispute it had with Prasarana Malaysia Bhd relating to the Kuala Lumpur Monorail Fleet Expansion Project contract that dates back to June 3, 2011.
This settlement comes with a RM303mil contract, out of which RM181mil of works will be almost immediate.
The settlement also entails Scomi Group’s wholly-owned subsidiary Scomi Transit Projects Sdn Bhd (STP) entering into a deal for Prasarana to acquire seven new sets of four-car trains for the Rapid KL Monorail route. STP would also repair five sets of four-car trains that have stopped operating since January last year.
The orders of the seven new trains are worth some RM122mil and will take 30 months to materialise.
In the nearer term, the work order for the refurbishment of the five sets of trains worth RM181mil will take place. The announcement of this deal saw Scomi’s share price hit limit up, jumping to a high of 14.5 sen from its previous close of 5.5 sen.
The stock has since settled at the 10 sen level, with many investors still sceptical about the company’s ability to turnaround sustainably.
Scomi Group’s new group chief executive officer Sammy Tse Kwok Fai who replaced Shah Hakim last July, is confident that things are looking up for the company.
Stronger financial footing
Tse explains that the settlement agreement signed with Prasarana has several conditions precedent (CP) to be fulfilled within 14 working days from the date of the agreement.
He says that successful execution of the agreement with Prasarana is one of the key factors to improving Scomi’s financial position.“The immediate focus is to fulfil the CP and to commence the refurbishment works and subsequently to formalise the agreement for the manufacture of the seven new four-car trains,” says Tse.
More importantly, Tse adds that the agreement with Prasarana will contribute towards meeting short-term obligations and cash flow for the transport solutions business.
“However this is not the only factor. Of a greater impact to our balance sheet would be the planned corporate exercises. This will give us the flexibility to improve our cashflow and strengthen business development activities”.
"Last August, Sammy Tse Kwok Fai was appointed CEO of SGB. This was supposed to be the precursor to new shareholders coming in. Is this accurate? Market talk back then had it that there would be a placement at about 20 sen. Now with Scomi trading at 4.5 sen, what is the plan to salvage the company?
The negotiations to bring in new investors are still ongoing. There are several interested parties, but these negotiations take time. Any such investor or placement exercise would be to support business growth and any such plan will be appropriately disclosed, as required under applicable regulations."
Above was the interview by The Edge back in feb 2019.
@birkincollector yes is in the edge this week. Thank you for pointing out as I didn’t subscribe to the edge. Most likely announcement will be made next week according to the source as reported. New fund will be injected to ease off Scomi’s financial burden. Other corporate exercise is also on the way which will take place between now to June 2019. It is very encouraging.
“However this is not the only factor. Of a greater impact to our balance sheet would be the planned corporate exercises. This will give us the flexibility to improve our cashflow and strengthen business development activities”.
Tse says Scomi is exploring corporate exercises to strengthen its balance sheet and infuse funds into the company for working capital and capital expenditure.
“We are cautiously optimistic of announcing these exercises by the second quarter of 2019.”
Does anyone have a TP for Scomi ? Sensible one with explanation pls. Not simply pluck out of thin air. Much appreciated. Their NTA is 0.24. So my own opinion TP around of 0.24, anyone willing to share their view in light of these corporate exercises?
Ini cerita betul.. •Scomi Rail had received a notice of demand from Maybank for a sum of RM201.9 mln as the latter had failed to repay the bank facilities. Scomi Group also received a notice of demand owing to its failure to repay RM114.0 mln to Maybank. •The bank is reserving the right to dispose of the shares of a subsidiary that was secured against the bank facilities, in the event the amount demanded is not paid. Both groups are in the process of negotiating a resolution with Maybank. (The Edge Daily)
KUALA LUMPUR (April 16): Scomi Group Bhd says it is still exploring various proposed corporate exercises aimed at strengthening its balance sheet and financial position, which may include a proposed capital reconstruction and recapitalisation exercise, where necessary.
The group was responding to an article in The Edge Malaysia weekly on April 15 that said Scomi was understood to have narrowed its search for an investor down to two parties.
Citing sources, The Edge weekly had said a decision and subsequent signing of a deal could take place as early as this week.
The weekly said Scomi's terms include the investor forking out a loan to the ailing company "to show commitment", after which a rights issue — raising anywhere from RM80 million to RM120 million — will be undertaken.
"There are two ongoing negotiations. One — a recently commenced negotiation — is with an investor with a regional oil and gas and property development presence while the other is with the long-talked-about Hong Kong party. You could say negotiations are ongoing concurrently," the magazine quoted a source familiar with the matter as saying.
Scomi, however, said that as of today, the matter had not been deliberated by the company's board of directors.
"In the event that any decision is made in relation thereto, the requisite announcement will be made accordingly," Scomi said.
At the midday break today, Scomi shares fell 4.76% or 0.5 sen to 10 sen with 5.07 million shares traded.
The monorail project secured recently is just a bonus for SCOMI. Actually SCOMI has sealed a deal with Tenaga Nasional Bhd for 30MWac Large Scale Solar Photovoltaic Power Plant on a build-own-operate basis and with power purchase for 21 years from Dec 31, 2018 the commercial operation date, at Bandar Sungai Petani, Kuala Muda, Kedah.
T800Terminator, this forum is getting less attention because of people spreading fake news here, end up no one will trust anyone in this forum, it is good to know that you are not one of them !
Yusut Isa, SCOMI involves in Energy, Infrastructure & Equipments Services. Do you think government will assign both important country infrastructure projects of Large Scale Solar Energy Supply & Monorail Transportation projects to a hopeless company? Please think again.
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MQ Trader 357 views | 2 d ago
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
jay_cwk88
484 posts
Posted by jay_cwk88 > 2019-04-13 15:51 | Report Abuse
How its fortunes have changed from a decade ago.
It was once an oil and gas darling in the early 2000s under then CEO Shah Hakim Zain and his partner Tan Sri Kamaluddin Abdullah. Barely a year after its debut on Bursa Malaysia in May 2003, the stock was trading close to the RM20 level because of its potential from new contracts as well as mergers and acquisitions.
Today, it is saddled with long-term borrowings of RM119.84mil and short-term borrowings of RM566.09mil. The company is also cashflow negative, with a deficit of RM25.98mil as of Dec 31, 2018.
For the nine months period to Dec 31, 2019, total losses stood at RM75.55mil on the back of RM421.97mil. Losses in the previous year stood at RM90.58mil on the back of RM571.7mil in revenue.
To make matters worse, on Feb 13, Scomi told Bursa Malaysia that it had defaulted and received a notice of demand from Malayan Banking Bhd for RM201.91mil.
The default arose due to the failure by Scomi Rail Bhd (SRB) to pay Maybank under the bank facilities granted to the company.
SRB is a wholly-owned subsidiary of Scomi Engineering Bhd, which in turn is a wholly-owned subsidiary of Scomi Group.
Scomi Group also received a notice of demand from Maybank amounting to RM113.96mil, due to Scomi Rail’s default.
As of Scomi’s announcement on April 8, Maybank has granted the group a further extension of time until April 22.
But all is not lost.
On April 4, Scomi Group announced that it had settled a dispute it had with Prasarana Malaysia Bhd relating to the Kuala Lumpur Monorail Fleet Expansion Project contract that dates back to June 3, 2011.
This settlement comes with a RM303mil contract, out of which RM181mil of works will be almost immediate.
The settlement also entails Scomi Group’s wholly-owned subsidiary Scomi Transit Projects Sdn Bhd (STP) entering into a deal for Prasarana to acquire seven new sets of four-car trains for the Rapid KL Monorail route. STP would also repair five sets of four-car trains that have stopped operating since January last year.
The orders of the seven new trains are worth some RM122mil and will take 30 months to materialise.
In the nearer term, the work order for the refurbishment of the five sets of trains worth RM181mil will take place. The announcement of this deal saw Scomi’s share price hit limit up, jumping to a high of 14.5 sen from its previous close of 5.5 sen.
The stock has since settled at the 10 sen level, with many investors still sceptical about the company’s ability to turnaround sustainably.
Scomi Group’s new group chief executive officer Sammy Tse Kwok Fai who replaced Shah Hakim last July, is confident that things are looking up for the company.
Stronger financial footing
Tse explains that the settlement agreement signed with Prasarana has several conditions precedent (CP) to be fulfilled within 14 working days from the date of the agreement.
He says that successful execution of the agreement with Prasarana is one of the key factors to improving Scomi’s financial position.“The immediate focus is to fulfil the CP and to commence the refurbishment works and subsequently to formalise the agreement for the manufacture of the seven new four-car trains,” says Tse.
More importantly, Tse adds that the agreement with Prasarana will contribute towards meeting short-term obligations and cash flow for the transport solutions business.
“However this is not the only factor. Of a greater impact to our balance sheet would be the planned corporate exercises. This will give us the flexibility to improve our cashflow and strengthen business development activities”.
Tse says Scomi is