OilCorp

It's truly amazing.

OilCorp was listed in place of Abrar Corporation back in 2003.

Flashback July 26th 2003. Published on Star Bussiness.

• OilCorp hopeful for more jobs
  
  BY TEE LIN SAY
  
  “IN our sector, how successful you are depends on how much you can cover under the oil and gas industry,” says OilCorp Bhd managing director Sunny Ng.
  
  Indeed, OilCorp's repertoire of services is not limited only to the petroleum industry. In recent years, OilCorp has managed to secure engineering, procurement construction and commissioning (EPCC) jobs relating to the power and sewerage industries.
  
  Of the total RM360 million of new jobs that OilCorp is currently bidding for, some RM221 million of it relates to the power industry.
  
  OilCorp, slated for a listing on the main board of the Kuala Lumpur Stock Exchange (KLSE), is targeting Aug 5, 2003 through a reverse takeover of financially troubled Abrar Corp Bhd.
  
  Construction based Abrar had in July 2002 signed an agreement to transfer its listing status on the KLSE main board to engineering, procurement and construction specialist OilCorp.
  
  As at March 31, 2000, Abrar had total liabilities of RM181.5 million and its shareholders' fund was in a deficit of RM164.8 million. It was not able to meet its financial obligations.
  
  Oilcorp has issued 1.6 million new OilCorp shares to the existing shareholders of Abrar on the basis of one new Oilcorp share for every twenty existing Abrar shares held.
  
  Abrar would then settle its debts to creditors by issuing 35 million new shares of OilCorp. Subsequently, OilCorp would acquire the entire equity interests in Oil-Line Engineering & Associates Sdn Bhd and Ascentland Sdn Bhd before assuming Abrar’s listing status.
  
  Therefore, what would the outlook be like for OilCorp once it takes over Abrar's listing status?
  
  Says an analyst from AmSecurities: “As the oil and gas industry in Malaysia is still growing, there is no shortage of fabrication jobs. We estimate that there is a total of some RM1.2 billion worth of jobs for fabrication of jackets and topsides in 2004 with another RM1.7 billion of onshore oil and gas projects,”
  
  What is interesting to note is that OilCorp gets many repeat orders from some of its big clients such as Petronas group of companies and Fluor Daniels International (M) Sdn Bhd.
  
  Going forward, with estimated engineering and procurement (E&P) of RM5.21 billion spent by Petronas Carigali Sdn Bhd in 2003, OilCorp does see itself as a beneficiary. After all, Petronas has recently reaffirmed its commitment to nurture local oil and gas service providers.
  
  Between 1998 and to date, the group has completed approximately 30 oil and gas and semiconductor projects on or ahead of schedule with recognition from clients.
  
  Its biggest project to date is a wafer fabrication project for Silterra Malaysia Sdn Bhd worth RM60 million. Its other notable clients include Malaysia Shipyard and Engineering Sdn Bhd and ESSO Production Malaysia Inc.
  
  “Currently, we have a market share of approximately 20 per cent in the on shore division, I believe we can increase this portion once we venture into the regional and international market,” says Ng.
  
  AmSecurities likes OilCorp because it is one of the few domestic players in the highly specialised field of provision of engineering, procurement, construction and commissioning (EPCC) services related to the oil and gas industry.
  
  OilCorp currently has jobs in hand worth RM100.3 million. Over the last five years, OilCorp has completed various jobs totalling RM243 million.
  
  Also, due to the specialised nature of many of the jobs handled by OilCorp, the company enjoys relatively lucrative margins. The analyst from AmSecurities has a group pre-tax margin forecast of 18.7 per cent for financial year (FY) 2003 and 12.7 per cent for FY04.
  
  Currently, OilCorp’s subsidiary, Oil-Line Engineering and Associates Sdn Bhd (Oil-Line), is exploring projects in Brunei. It is also bidding for jobs in Indonesia, Singapore and Vietnam.
  
  “OilCorp is planning to step up marketing efforts for the international and regional market to increase the business network in various countries of interest,” says Ng.
  
  Ng feels that his company's edge lies in its pool of skilled engineers available onshore and offshore. These are specialists who can be sourced both locally and regionally.
  
  “We have an added advantage in our 22-hectare one-stop integrated fabrication yard in Pulau Indah, Selangor. That will enable us to participate on more oil and gas projects,” says Ng.
  
  Upon the completion of this RM40 million project, it would be able to actively become one of the local players as fabricators of offshore structure and modules as well as opportunities to extend its business into shipbuilding and repairs, and also building power barges in the long term. This will help redistribute the business focus from onshore to both onshore and offshore.
  
  At the moment, Ng says that there are already many competitors in the onshore division. He feels that the Pulau Indah fabrication yard will act as a catalyst to kick off the company's offshore activities.
  
  The analyst, however, is slightly concerned with the poor visibility and high volatility of OilCorp's earnings. Currently, the nature of many of the jobs secured or tendered by OilCorp are very short term in duration. This puts the company in risk as the company may be exposed to fluctuations in its revenue stream if it does not secure new or similar jobs.
  
  In terms of revenue contribution, oil and gas contributes 80 to 90 per cent while property contributes the remaining 10-20 per cent.
  
  Its property development and resort operation division is represented by Ascentland, whose main business activity is the development of a first-of-its-kind in the country concept of a 9.2 hectare water paradise known as PD Tiara Bay Resort in Port Dickson. It is a freehold mixed development of residential, commercial and water theme park.
  
  Upon completion in early 2005, the project will comprise a man-made beach paradise with six Olympic-sized swimming pools, a water theme park with interactive water play systems and five-star resort facilities. The residential development will consist of more than 900 apartments.
  
  OilCorp group posted a proforma turnover of RM38.9 million for 2001. Last year, the proforma turnover amounted to RM79.5 million and Oilcorp is forecasting a proforma increase to RM120 million in December 2003. Consolidated profit after tax is forecasted at RM7.49 million. Net gearing for the group is around 0.4 times.
  
  At an offer price of RM1.10 per share, OilCorp would be one of the cheapest oil and gas companies in terms of price earnings ratio. The analyst from AmSecurities has a fair value of RM1.47 for the stock.

Back in 2004, the company tried to do a 1 for 2 stock split. However, it was rejected. See here

• We refer to the announcement dated 28 July 2004 where it was stated that Bursa Malaysia Securities Berhad ("Bursa Securities"), vide its letter dated 27 July 2004, did not approve the Proposed Share Split and the application for waiver for non-compliance with the Listing Requirements.

Sep 9th 2004.

• Thursday September 9, 2004
  Oilcorp bids for RM1b projects
  
  OILCORP Bhd is bidding for projects worth RM1bil, of which 70% to 80% are within the country, said managing director Sunny Ng.
  
  “We are going all out for oil and gas, petrochemicals and power plant projects so that we can generate recurring income. Oilcorp is aggressive in terms of securing tenders and projects,” he said after the company’s EGM in Shah Alam yesterday.
  
  The group provides engineering, procurement, construction and commissioning (EPCC) services to the oil and gas, petrochemicals, power generation and semiconductor industries.

Bidding for 1 Billion projects! And here's a clip of the Business Times version.

• Oilcorp targets RM1b projects
  By ZAIDI ISHAM ISMAIL
  
  OILCORP Bhd is going all out to secure RM1 billion worth of oil and gas, petrochemical, power plant and shipbuilding projects to ensure a continuous income stream.
  
  Managing director Sunny Ng Huat Tian said that up to 80 per cent of the projects will be locally-based, while the rest will be from overseas.
  
  “Oilcorp is aggressive in terms of securing tenders and projects,” Ng told reporters in Shah Alam, Selangor, yesterday. He declined to give details.

So how was OilCorp doing as a company?

25th Feb 2005. Quarterly rpt on consolidated results for the financial period ended 31/12/2004

It's fiscal year 2004 showed a net profit of some 15 million according to that quarterly earnings.

Not too bad, yes?

However, a month later 29th March 2005, came the bombshell. PRESS RELEASE ISSUED BY SECURITIES COMMISSION

And this was what the press reported.

• Tuesday March 29, 2005
  SC orders Oilcorp to re-state 2003 financial results
  
  THE Securities Commission (SC) has directed Oilcorp Bhd to re-issue its financial statements for the year ended Dec 31, 2003, including the 2002 comparative figures.
  
  The SC said in a statement yesterday the company had failed to comply with Regulation 4 of the Securities Industry Regulations 1999 on its treatment of non-elimination of profits arising from intra-group transactions.
  
  “This treatment is in breach of Financial Reporting Standard (FRS) 127 and has the effect of over-stating the consolidated revenue and profits of Oilcorp,” the commission added.
  
  In addition, Oilcorp had presented certain expenses as “extraordinary” in its income statement in breach of FRS 108.
  
  Consequently, the SC said, the company's presentation of its basic earnings per share before extraordinary items “is inappropriate.”
  
  Oilcorp had reported revenues of RM170.9mil and a net profit of RM15.3mil for 2003. The SC did not say by how much the company should re-state its revenue and earnings.

And reporter Errol Oh from Star Business made an in depth report on it.

• Saturday April 2, 2005
  Oilcorp has a lot to explain
  
  BY ERROL OH
  
  WHEN the Securities Commission (SC) announced last Monday that it had directed Oilcorp Bhd to reissue its 2003 accounts, the stock market's reaction was swift and predictable. The share price dived from that day's closing of 88 sen to 68 sen on Thursday, almost a 23% plunge.
  
  The SC said the move was because Oilcorp's consolidated financial statements had not been prepared in accordance with certain approved accounting standards.
  
  This sort of stern action by the authorities is not an everyday affair, and it spooked the Oilcorp shareholders. No longer sure about what they know about the company, they dumped the stock. Says a corporate sector observer, “How can something like this happen? Compliance with accounting standards is such a fundamental thing.”
  
  It is fundamental, yes, but it is hardly a simple matter. Financial reporting standards and disclosure requirements are increasingly more complex and exacting, and the investing community's scrutiny of the listed companies' accounts is getting more intense.
  
  In such an environment, slip-ups and misjudgements are more likely to occur. As recent events have shown, this is already happening in corporate Malaysia.
  
  On March 7, Goh Ban Huat Bhd said it had to amend its unaudited fourth-quarter results – thus reporting a net loss instead of a net profit originally – because the management misunderstood the accounting principles relating to the treatment of intra-group sale and purchase of assets.
  
  Days later, Supercomal Technologies Bhd amended its December quarterly results (first released on Feb 28) because of a few mistakes.
  
  In comparison, the Oilcorp case is far more sensational and has a deeper impact. The 2003 accounts had been audited and were tabled in an annual general meeting (AGM) last June. Now, the management must face the shareholders again, this time with the restated accounts and there may well be some hostility.
  
  Says SC deputy chief executive Datuk Zarinah Anwar, “They have to convene a general meeting specially to pass the new accounts, which means that the shareholders will know that the original accounts were false. This is where we expect shareholders to come out and take action.”
  
  There will indeed be a lot of explaining to do. OilCorp group managing director Sunny Ng did not return BizWeek's call. The company is expected to make an announcement through Bursa Malaysia this week, detailing the changes to its financial statements, and the reasons and effects.
  
  According to the SC statement, Oilcorp's 2003 accounts have two problems – one regarding profits from transactions between companies in the same group, and the other regarding an extraordinary items.
  
  The regulatory body says the company did not eliminate profits arising from intra-group transactions, which is a breach of Financial Reporting Standard (FRS) 127.
  
  The principle here is that when the accounts of a group of companies are consolidated, profits arising from dealings between companies within the group should be taken out because this is essentially money going from the left pocket to the right pocket.
  
  The SC points out that the non-elimination of the profits has the effect of overstating Oilcorp's consolidated revenue and profits. Insiders say the amount involved is a few million ringgit.
  
  What is interesting about this breach is that it is usually impossible to detect just from reading the published accounts. This indicates that the SC has been studying the Oilcorp case for some time and had been talking to the management.
  
  Here is an example of the work of the SC's market surveillance unit. Says commission chairman Datuk Md Nor Yusof, “It's more of a quiet, in-depth and behind-the-scenes study.”
  
  The probe may have been low-profile, but SC's follow-up on the outcome is meant to make people sit up and take notice. The press release and the directive to Oilcorp are clearly designed to strike fear and to serve as a warning to the management of listed companies.
  
  However, this tough approach does not address the problem that accounting standards are sometimes subject to interpretation.
  
  According to those familiar with the Oilcorp case, the bigger issue, by far, with the 2003 accounts is the treatment of the extraordinary items. And company insiders insist that this is not a clear-cut issue.
  
  Says the SC in its statement, “Oilcorp had also classified and presented certain expenses as Extraordinary in the income statement in breach of FRS 108. Consequently, the presentation of the company's Basic earnings per share before Extraordinary Items is inappropriate pursuant to FRS 133.”
  
  In the annual report, the income statement includes extraordinary items amounting to almost RM38mil. These refer to the write-off of “one-off corporate costs pursuant to corporate and restructuring scheme for transfer of listing status”.
  
  As the white knight for PN4 company Abrar Corp Bhd, Oilcorp was listed in place of Abrar in August 2003. According to insiders, of the RM38mil, RM35mil represented the listing premium of Abrar , that is, the price for Abrar's listing status.
  
  If the extraordinary items were reclassified, Oilcorp's operating profit of RM20.9mil for 2003 would become an operating loss. However, the restatement is not expected to alter the bottom line which is a net loss of RM25.6mil.
  
  Oilcorp's stand is that the expense has been correctly treated as an extraordinary item. Obviously, the SC has a different take on this. In this difference of opinions, the accounting standards may not be of much help.
  
  FRS 108 (titled “Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies”) prescribes the classification, disclosure and accounting treatment of certain items in the income statement.
  
  It defines extraordinary items as “income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the enterprise and, therefore, are not expected to recur frequently or regularly”.
  
  At the same time, FRS 108 says only on rare occasions does an event or transaction give rise to an extraordinary item. “It is possible to view such items as being external to managerial control and exhibiting a high degree of abnormality,” it adds.
  
  Says an official of an accounting body, “I tend to believe that there is no such thing as an extraordinary item. However, infrequent or unusual the item, it affects the company anyway.”
  
  This reflects the thinking in the global accounting fraternity. Beginning this year, the International Accounting Standards Board bars the separate classification of extraordinary items in the income statement.
  
  Nevertheless, at the time when Oilcorp prepared its 2003 accounts, the accounting standards still allowed extraordinary items. That may not matter anymore. The management has said it would comply with the SC's directive, which presumably means that it is no longer contesting the commission's interpretation of the standards.
  
  What is left now is for Oilcorp to convince the stock market that the reissue of the accounts is the result of honest mistakes. To some observers, the SC has struck a blow for market integrity and investor protection. The wisest way for Oilcorp to respond is to be transparent and to learn from the experience.

A less than transparent company. Don't you wonder about the earlier press statements about the billion dollar oil and gas projects it was bidding for?

So OilCorp restated its earnings.

• Tuesday April 26, 2005
  Oilcorp re-states 2003 financial results
  
  OILCORP Bhd has re-stated its financial results for the year ended Dec 31, 2003 to show a loss after tax of RM28.6mil instead of a profit after tax of RM14.7mil as reported previously.
  
  It told Bursa Malaysia yesterday that the Securities Commission (SC) reviewed its financial statements and noted the following reporting issues:
  
  . Non-elimination of certain intra group transactions;
  
  . Presentation of extraordinary items; and
  
  . Presentation of loss per share.
  
  The company said it has been in liaison with the SC and external auditors to resolve the issues.
  Other figures that Oilcorp have now re-stated include net loss, which should be RM29.6mil instead of a loss of RM25.6mil and loss per share of 31 sen instead of 26 sen.

Makes one wonder about OilCorp, yes?

But then incredibly, a change of 'fortune'.

10/10/2005. Offer to Lead the Formation of the Konsortium Perikanan Nasional Berhad (''KPNB'') by the Ministry of Agriculture and Agro-Based Industry (''MOA'')

And of course the share soared.

• Tuesday October 11, 2005
  
  Oilcorp to lead national fisheries project
  
  BY C.S. TAN
  
  SHARES in Oilcorp Bhd, which provides engineering services for the oil and gas industry, were actively traded as they rose 11 sen or 12% to RM1 yesterday. Some 12.6 million shares changed hands.
  
  This followed a rise of 29 sen in its share price last week.
  
  The company, in reply to a query from Bursa Malaysia on the unusual market activity, said it was not aware of any activity that may have contributed to that, other than a letter of offer from the government to lead the national fisheries project.
  
  Oilcorp said the letter from the Agriculture and Agro-based Industry Ministry was received last Saturday.
  
  The ministry offered Oilcorp to become a lead consortium member to spearhead the national fisheries project through Konsortium Perikanan Nasional Bhd or National Fisheries Consortium Bhd.

And what about the BILLION DOLLAR oil and gas projects? No more oil? Only fish? Fishy?

On 16th Feb 2007, OilCorp proposes yet again another share split! See the announcement here

An truly incredible nonsensical 1 for 10 share split!

What does the stock split do? Nothing? It does not change the value of the company and it definately does not improve the fundamentals of the company. It's simply a pathetic corporate strategy to attract investor!

And the most incredible thing was OilCorp was trading at 1.33!

Split the stock so that it can trade at 13 sen????

Truly nonsensical!

Yesterday, there was an news report on OilCorp's property development! Yes OilCorp has ventures into the property business too! (Where's the Oil dude?).

• D'Tiara's revenue may hit RM200m in 4 years
  By Roziana Hamsawi
  roziana@nstp.com.my
  
  July 16 2007
  
  OIL and gas support specialist Oilcorp Bhd expects its property subsidiary D'Tiara Corp Sdn Bhd's revenue to increase fivefold to RM200 million in four years.
  
  D'Tiara, which posted a revenue of some RM27 million last year, is confident that from 2011 onwards its revenue would be between RM150 million and RM200 million.
  
  D'Tiara is in discussion for a listing on the Alternative Investment Market (AIM) of the London Stock Exchange to raise funds for the projects.

LOL!!!

Same style. Optimistic projects and now even listing for AIM!

Wah! So good eh?

So how's OilCorp doing as a company?

25/5/2007 Quarterly rpt on consolidated results for the financial period ended 31/3/2007

Only a net profit of 5 million! Whatever happened to the billion dollar oil and gas projects and the fishery projects?

And if you read the balance sheet attached in the above quarterly earnings, OilCorp has only 7.5 million in its piggy bank, with a total loans of 247.248 million!

Does it look like a sound fundamental company to invest in???

Disclaimer:

Oh yeah.. in a hot share market, any share can go up! :P