by MARK RAO/ pic source: www.asiaselink.com
SEALINK International Bhd could be among the oil and gas (O&G) support service providers to look out for as its share price tests new highs as the company readies itself for upcoming anticipated charters.
Sealink’s share price hit a four-year high of 38 sen yesterday and has advanced by some 220% year-to-date.
This is in spite of the marine vessel, shipbuilding and ship repair service provider remaining in a net loss position, having raked up RM19.1 million in losses in the first half of 2019 (1H19) against a net loss of RM12.31 million in 1H18.
The loss was largely owing to the group’s activation of vessels which resulted in margin deterioration but net cashflow from operating activities improved substantially despite the high activation cost.
The group’s cash and cash equivalents were at RM3.85 million in 1H19 against negative cash and cash equivalents of RM19.37 million in the corresponding period last year.
In its latest exchange filing, Sealink stated it is spending more on the activation of vessels to make them available, fit and proper for upcoming charters in anticipation of revenue growth in 2H19.
The company builds, owns and operates a fleet of marine support vessels to serve the global exploration and marine industry.
Its shipping division has a fleet of 33 vessels while its shipyard constructed 68 vessels to-date, according to the company’s latest annual report.
The global shipping sector is expected to remain stable while the local maritime industry will be supported by the Malaysia Shipping Master plan.
Rising exploration and production activities are also forecast to bolster the local and global O&G industries.
“Barring any unforeseen circumstances or events, the board is optimistic demand for offshore marine support vessels will improve with further increased expenditure in offshore oil field development and maintenance work by the oil majors,” Sealink International said in its latest filing.
The industry outlook is improving in anticipation of a recovery in shipping, the company added. The company’s share price movement will likely be guided by its fiscal performance for the remainder of the year.
The relative strength index for Sealink International’s stock was above 70, indicating that the counter may be overbought, based on Bloomberg market intelligence.
Sealink International was founded by Yong Foh Choi back in 1974 and initially provided chartering services of marine vessels to non-O&G industries. This included the navy, fishing, dredging, logging and mining industries in and outside Malaysia.
It was only in 1994 that the company ventured into chartering vessels for the offshore O&G industry. In 1997, the company began its shipbuilding business.
The group’s markets include the US, Australia, China, India, Latin America, Europe, East Africa, South-East Asia and the Middle East.