Thursday, February 10, 2011

Regarding UMW Oil and Gas Listing

Posted last year:

From the 18 June 2010 posting: All Talk And No Action From UMW Holdings On Its Listing Of Its Oil and Gas Unit

  • It utterly shambolical!

    As one of the bigger listed corporate in the stock exchange, you simply can NOT be making wishy washy announcements to the investing public.

    Issue this morning is UMW's proposed listing of its oil and gas unit.

    Yeah, it's a listing of a subsidiary and if judged by past recent history, such investing does carries a huge risk for the minority investor because the holding company does have an option of delisting it by take it private via a general offer.

    Anyway, in regards to UMW's proposed listing of its subsidiary.

    Last month I highlighted this issue: UMW Holdings Talks About Listing Its Oil And Gas Division ... Again
    As stated, UMW stated it wants to list its subsidiary by year-end.

    And as stated by that blog posting, UMW made this listing proposal way back on 28th Feb 2008!!

    Yes it was that long ago!

    And it kept saying they want to see "market conditions show sustained levels of improvement" before listing.

    Yes, the want to get the best possible price and profits from the listing of its subsidiary!

    And today, UMW struck once more!

    It's now saying it wants to wait until the second half of the year before deciding!!!! ......

On today's Business Times

  • UMW's new drive

    By Zuraimi Abdullah Published: 2011/02/10

    UMW Holdings Bhd (4588)will consolidate and rationalise some of its core businesses to become leaner and meaner, its managing director Datuk Syed Hisham Syed Wazir said

    Consolidation is under way for its manufacturing and engineering and equipment divisions as UMW, among Malaysia's top five most admired companies according to the Asian Wall Street Journal, looks to leverage on its vast range of products and services.

    The oil and gas (O&G) division may also be restructured, but Syed Hisham said UMW Oil & Gas Bhd's listing plan remains on the cards once it returns to profitability.

    "We are looking at consolidating our businesses wherever possible so that UMW can become a strong and lean group. We should be able to leverage on the group's wide range of products and services in our international presence and also on the strength of each of our operations," Syed Hisham said in an interview to mark his first 100 days in Shah Alam, Selangor, recently.

    "Right now, our operations are managed independently. Each SBU (strategic business unit) needs to help the others so that we can all reap maximum benefits. For example, we should be able to cross-sell our products and services effectively and achieve cost-savings through volume procurement of common items, etc," he added.

    UMW's O&G division, which began in 2002, posted a net loss of RM48 million for the nine-month period ended September 30 last year.

    This was due to the imposition of countervailing and anti-dumping duties by the US government on Chinese pipe importers.

    The move had affected UMW group's major profit-contributing associate company, Wuxi Seamless Oil Pipe Co (WSP), Syed Hisham said.

    However, WSP had secured new customers in world markets like Venezuela and should return to profit this year.

    "Our O&G business segment has expanded rapidly since its establishment in 2002. I believe we need to take a good look at all our O&G businesses and see if we can restructure or rationalise some of our investments."

    Syed Hisham said the group's jack-up rig Naga 2 was already working and will generate full-year revenue in 2011.

    "We are now in negotiation stage with potential partners for the leasing of Naga 3 and we expect it to be in operation in the first quarter of 2011."

    He added that its associate company in India, United Seamless Tubular Pte Ltd, had last August started commercial production of seamless pipes for the oil gas sector.

    "This company will also be revenue-generating in 2011. The plant has a capacity of 300,000 metric tonnes per year," Syed Hisham said.

    The year 2011 will also be a good year for its equipment business.

    "We plan to maintain and possibly even expand our market share and performance. There will be a consolidation exercise in our Papua New Guinea operations," Syed Hisham said.

    He said the manufacturing and engineering division had performed well last year and should sustain the performance this year.

    "We are looking at some consolidation and some possible new areas for investment," he added.

    UMW will continue to thrive more with its automotive business, though.

    "The automotive industry is expected to show strong growth and that will benefit us," Syed Hisham said.

    UMW controls about half of the country's new vehicle sales volume, thanks to its Toyota and Perodua business, and expects to maintain its market share this year.

    About 78 per cent of the group's revenue for the nine months ended September last year came from automotive division. Earnings- wise, the division accounted for more than 90 per cent.

    Syed Hisham said UMW was aiming to have equal revenue contribution from its automotive and non-automotive divisions over the next five years.

    The group reported a 22 per cent rise in group revenue to RM9.4 billion for the nine months to September last year against RM7.3 billion a year ago.

The whole picture changes eh?

  • UMW's O&G division, which began in 2002, posted a net loss of RM48 million for the nine-month period ended September 30 last year

Err... most Oil and Gas companies are raking in mega bucks! Why is UMW Oil and Gas division losing so much money?

Flashback to the two postings made last year. Then UMW president and group chief executive officer Datuk Abdul Halim Harun said "We've decided to wait for a while so that we can have a bigger IPO and everybody can have a bigger share of the cake..... We would like to see it (proposed listing) happen, but it will depend on several factors, which include the economic condition.... Everything is about timing. It must be right before we can list..."

Now? Syed Hisham, the MD, says "UMW Oil & Gas Bhd's listing plan remains on the cards once it returns to profitability."