Monday, 4 March 2013

Kulim - Revives proposed sale of Orkim BUY

- Kulim Bhd announced that it has proposed to sell its effective interest of 35.8% in Orkim Sdn Bhd to GMV-Orkim Sdn Bhd for RM110mil or RM5.73/share.

- After rescinding the proposed disposal of Orkim to Trident Hallmark Sdn Bhd, which has Tan Sri Abdul Rashid Manaf as one of its directors, it appears that Kulim has found another buyer for its investment in Orkim.

- Recall that the proposed sale of Orkim to Trident Hallmark was terminated in early-February 2013 due to non-waiver of certain conditions.

- The selling price of Kulim’s 35.8% stake in Orkim to GMV-Orkim of RM110mil is the same as the proposed sale to Trident Hallmark.

- The current directors of GMV-Orkim are Mohd Yazid Safuan and Zakaria Saad. GMV-Orkim holds a 40% stake in Orkim currently.

- The gain on disposal of the 35.8% interest in Orkim would be about RM59.4mil. Kulim has held its investment in Orkim for four years.

- As a whole, Kulim’s shipping division recorded an EBIT of RM52mil in FY12. This accounted for 6% of Kulim’s EBIT in FY12.

- Apart from Orkim, Kulim also has a 51% equity interest in EA Technique Sdn Bhd, which owns eight tankers with a total capacity of 85,000 DWT.

- We believe that Orkim owns five tankers with a total capacity of 44,000 DWT currently. Orkim also manages two vessels owned by a third party for an oil and gas company.

- We maintain a BUY on Kulim for its indirect exposure to the plantation industry in Papua New Guinea and being proxy to an improvement in CPO prices.

Source: AmeSecurities

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