Malaysia's Icon Offshore in advanced talks to buy MRO business

MALAYSIAN offshore oil and gas services firm Icon Offshore is in advanced talks to buy a maintenance, repair and operations (MRO) business that will help it diversify earnings and boost profitability, its top executive said on Monday (May 30).

"We are preparing for the next phase of growth with this potential acquisition," managing director Hadian Hashim, 64, told Bloomberg News in an interview at Icon's headquarters in Kuala Lumpur. "We hope to wrap up the deal before the end of the year. The acquisition will provide us with a new earnings stream while reinforcing our position in Brunei and help us to expand regionally."

He declined to name the target but said Icon would be able to fund the acquisition via internal funds and some borrowing. The planned deal is estimated to provide at least a 30 per cent increase in net income and will help mitigate the cyclical nature of the company's earnings, Hadian said.

The company, which counts Malaysian private equity firm Ekuiti Nasional as indirect major shareholder, owns and operates 20 active offshore supply vessels and a jack-up drilling rig, according to its official website. Currently, the company derives 60 per cent of its profits from Malaysia and the remainder from Brunei, Hadian said.

Icon's outlook for the next few years will be good and will be supported by the sustained high crude oil prices and order book, Hadian said. The company has a combined order and tender book totalling RM2 billion (S$625 million), he said.

Icon has a buy call from Maybank Investment Bank, which pegs a target price of 16 sen per share on the company, according to analysts tracked by Bloomberg. The stock ended unchanged at 10.5 sen per share on Monday.

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Maybank's equity analyst Liaw Thong Jung expects "sequentially stronger" second quarter outlook for Icon after the company returned to profitability in first quarter with a net income of RM2.96 million versus a net loss of RM11.15 million a year ago. Revenue grew 31 per cent on-year to RM66.95 million mainly driven by its drilling business, according to stock exchange filing. The company is projected to report a net income of RM49.2 million for year ending 2022 from RM22.5 million last year, according to Liaw. BLOOMBERG