As the equity market starts to heat up, the Sarawak themed play which is fueled by the SCORE (Sarawak Corridor of Renewable Energy) had been putting a lot of Sarawak Company into a bullish ram. We had the looks of Naim, SCABLE, CMSB and PMETAL which had been soaring in a powerful manner. As interesting as all the above company, and as the last had always been kept for the last, SYSCORP had caught my very attention as it had yet to be noticed in a full scale whilst is prospectus is huge given the outlook of SCORE.
Let's have a quick look on SYSCORP latest price movement
Syscorp had been consolidating for the past 5 months without any extraordinary huge participating volume. Syscorp had see saturation in the level of RM 0.50 and will soon be exploring into a new region in the coming days as SYSCORP will be charging into the uncharted zone above RM 0.55. A quick outlook will be seeing SYSCORP challenging a psychological barrier of RM 0.60 in a huge volume.
SYSCORP - Yet another big SCORER
SYSCORP, or known as Shin Yang Shipping Corporation Berhad, engaged in the provision of domestic and international shipping services, ship repair and fabrication of metal structures. The Company operates in three segments:
- Shipbuilding, ship repair and fabrication of metal structures.
- Domestic and regional shipping segment, covering regional routes within Malaysia and ASEAN
- International shipping segment, which carries out shipping business in United Arab Emirates and international routes to Japan, Korea and China.
Currently, SYSCORP had a total number of 301 vessels with a Gross Registered Tonnage (GRT) of 469874 tonnage which is trading around the Asian region in various sizes includes tugboats, dumb barges, hatch covered barges, coastal cargo vessels, and supply vessels.
Whilst the shipping industry had been facing huge challenges on low cargo rates, SYSCORP had been able to maintain itself by putting in focus in ship building, repairing and maintenance work.
SYSCORP revenue had saw a huge increase after securing more new ship orders, ship repairing and maintenance work. According to reliable internal sources, SYSCORP revenue for FYE 2014 is slated to breach above the RM 1 billion mark, as it possibly put up to around RM 1.2 billion in revenue, marking the return of SYSCORP into the black.
As of recent, SYSCORP had venture into the transportation of iron ore for mines in Indonesia. Shipment of the mineral will commence in the 2H of 2014 which will be contributing positively towards the financial of SYSCORP.
SYSCORP involvement in the oil and gas industry will be the major face lift for the company. The recent contract back then at 2013 is a RM70 million contract from Dayang for the construction of an offshore accommodation work boat. The robust oil and gas industry outlook in Malaysia for 2014 and 2015 will be seeing more contract dishing out to cater for the demand in the industry. With Petronas commitment to spend up the RM 300 billion capex (Currently still around RM 200b remaining) from 2011 to 2015, oil and gas industry outlook in Malaysia will continue to be bullish for the next 3 to 5 years. SYSCORP is looking set to more order from the oil and gas industry in the 2H 2014 for it's ship building yard in Miri, Kuala Baram and Bintulu.
Beside the bullish oil and gas industry, the Sarawak SCORE program will also see SYSCORP being one of the major beneficial as they will be hugely benefit from the busy in and out transportation of raw material from East to West Malaysia. We continue to believe that the SCORE program that includes sea port building will continue to provide a positive outlook for SYSCORP.
Upcoming Catalyst
While the shipping rates had been low, SYSCORP focus in ship building, repair and maintenance had been a contributing factor for the revenue. SYSCORP will be relocating resources and focus in the ship building, repair and maintenance sector. SYSCORP is also being rumored to receive a few ship building contract worth more than RM 100m from a oil and gas company for a high end vessel.
I believe SYSCORP will be a good potential company to invest
- Direct and indirect benefits from multi-billion SCORE program
- Involvement in the robust oil and gas industry.
- Involvement in ship building, repair and maintenance. Ship repairs had been a growing demand, which underline SYSCORP major revenue.
- Growing palm oil/timber out put in Sarawak and Sabah
- Trading at a discount of 44% from it's NTA of RM 0.93
- Award of ship building contract that is slated for 2H 2014
- Diversified business with Foreign exposure in UAE in transportation of building material.
SYSCORP will be a good investment vehicle after the company focus in the ship building and repair and maintenance services, which is the main contributing bottom line in the revenue. In the coming days, SYSCORP will embark more into the oil and gas sector, putting him as another rising star like Coastal Contracts. SYSCORP will be seeing to challenge above RM 0.60 in the short term outlook, while a longer tenure will suggest SYSCORP trading at RM 1.00 should SYSCORP repackage himself into a visible oil and gas player.
Bone's short term TP: RM 0.65
Cheers and have a nice days
