Wednesday, 18 Sept 2017

KUALA LUMPUR: ENRA Group Bhd plans to acquire an Australian company dealing in chemical supply to expand its downstream oil and gas (O&G) segment beyond Malaysia, which could instantly increase its order book to RM70 million annually.


The group, which currently records an annual order book of RM40 million to RM50 million, expects the Australian firm to contribute up to 30% to its revenue in three years, said ENRA president and group chief executive officer Datuk Mazlin Junid.


Mazlin said the acquisition was expected to be completed within its current financial year ending March 31, 2018 (FY18). The company is undergoing a due diligence process now.

“We are evaluating the acquisition which is being done by our wholly-owned ENRA Kimia Sdn Bhd. However, we have not finalised the structure of the deal; it is still very preliminary,” he told The Edge Financial Daily. “We could possibly [carry out the acquisition] through an Australian incorporated holding company depending on tax implications,” he added.

Mazlin said the downstream chemicals supply market in Australia is three times the size of Malaysia’s.

“Currently, consumption is typically fixed so contribution to the revenue depends on clients’ production output. However, we believe that contribution would increase by 30% [in three years]. We see an immediate RM20 million increase in our order book and growth in three years,” he said.


Previously known as Perduren (M) Bhd and operating as a property development and investment company, ENRA has diversified into upstream and downstream O&G businesses since 2015. The O&G division is involved in the trading and supply of specialty chemicals, provision of logistics services, engineering and fabrication works. The division’s operating profit surged 154.2% to RM6.1 million for FY17 from RM2.4 million in FY16 as revenue spiked 322.1% to RM59.1 million from RM14 million. The segment’s operating profit contributed to the group’s overall profit by up to 16% in FY17 versus 8% in FY16. ENRA’s property development segment posted an operating profit of RM32.6 million in FY17, up 28.9% from RM25.9 million in FY16. Revenue rose 11% to RM120.2 million from RM108.3 million.


Mazlin said the upstream O&G division has an order book of RM200 million from its Myanmar project where it provides leasing service of its single-point mooring system and storage tanker to Petroliam Nasional Bhd subsidiary PC Myanmar (Hong Kong) Ltd. In its 2017 annual report, ENRA said it expected more growth for the division particularly when the Pengerang Integrated Petrochemical Complex in Johor begins operations.


ENRA Kimia’s principal products have a track record of being utilised in the downstream O&G industry, and as such it is a prime candidate to serve the needs of the O&G industry in the Pengerang complex, it added. “The group has no legacy O&G assets or liabilities. We are strategically positioned to propose cost-effective solutions to the industry with our portfolio of partners. ENRA Kimia was profitable despite only having commenced business approximately 20 months ago,” the group said.


For the first quarter of FY18, the O&G division saw a 44.3% rise in pre-tax profit to RM3.3 million, from RM2.3 million a year earlier, driven mostly by higher sales in chemical products as more contracts were secured during the quarter.


ENRA’s share price closed unchanged at RM2.80 last Friday, giving the group a market capitalisation of RM381.38 million.

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