Ramunia warrants draw interest
The Star
5 February 2005

With rotational play, especially exciting among newly listed companies, fundamentals seem to have taken a backseat. There seems to be more focus on news-driven activity such as mergers and acquisitions.

The debut of oil and gas engineering and heavy-fabrication group Ramunia Holdings Bhd's warrants attracted much interest in the first few days of its listing. Ramunia was listed on the second board of Bursa Malaysia in place of financially distressed Saship Holdings Bhd.

For this listing, 9.32 million Ramunia warrants were issued free of charge to every entitled shareholder who had acquired one share, five irredeemable convertible unsecured loan stocks and five irredeemable convertible preference shares (ICPS) for every two ICPS held on Dec 22, 204.

These warrants provide a sweetener to shareholders, who may have been pleased with the price performance as it has risen to 33 cent as of Thursday. The mother share closed at 70.5 cent.

The warrants have an exercise price of 55 cents with a lifespan of 10 years. Based on the mother share's price of 70.5 cent, the warrants are trading at a gearing of 2.14 times and a premium of 25%.

For its financial year ending October 2005, the group has forecast a revenue of RM193 million, and a net loss of RM25.89 million. The loss is, however, a one-off item.

The net loss is due to a RM36.5 million one-time expense, the bulk of which is due to a RM33.5 million loss on disposal of Saship. Operationally, the company is in the black and will be in the black in the following financial year as the item is not recurring.

The Ramunia group is principally involved in major fabrication of offshore structure in Malaysia through Ramunia fabricators Sdn Bhd.

Ramunia was incorporated for the purpose of facilitating the completion of its restructuring scheme, which will result in Ramunia becoming the holding company of Ramunia Fabricator and owner of Teluk Ramunia fabrication yard (TR Yard).

The ownership of TR yard has bolstered the company's position to third place in terms of yard capacity after its main rivals, Malaysia International Shipping Corp Bhd's Malaysia Shipyard and Engineering Sdn Bhd (MSE) and Sime Sembcorp Engineering Sdn Bhd.

As for Ramunia Fabricators, it is said to be a strong niche player in the high-growth heavy-fabrication industry. It was recently announced that Ramunia Fabricators is set to carry out offshore hook-up and commissioning works for the Semarang oil field facilities offshore Sabah.

It is the first work order won by Ramunia Fabricators under the umbrella contract awarded by Petronas Carigali Sdn Bhd for its offshore facilities for the 2004-2007 period.

Ramunia expects to secure its first two major overseas contracts worth more than RM100 million between April and September this year. The jobs are for the fabrication of offshore oil and gas structures - the company's core business - in Indonesia.

Currently, Ramunia has jobs totaling RM120 million and is bidding for about RM1 billion more, locally and abroad. It also expects to form a joint venture son to manufacture heavy equipment for a European firm at its yard in Teluk Ramunia in Johor.

The company is also expanding its marine support facilities, and would be procuring a few marine vessels. It will set aside not more than RM10 million to buy several vessels.