Icon Offshore in advanced talks to buy MRO business

by BLOOMBERG / graphic by TMR

MALAYSIAN offshore oil and gas services firm Icon Offshore Bhd 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.

“We are preparing for the next phase of growth with this potential acquisition,” MD Hadian Hashim, 64, told Bloomberg News in an interview at Icon Offshore’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 Offshore would be able to fund the acquisition via internal funds and some borrowing. The planned deal is estimated to provide at least a 30% 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 Bhd as an 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% of its profits from Malaysia and the remainder from Brunei, Hadian said.

Icon Offshore’s outlook for the next few years will be good and will be supported by the sustained high crude oil prices and orderbook, Hadian said. The company has a combined order and tender book totalling RM2 billion, he said. 

Icon Offshore 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.

Maybank Investment’s equity analyst Liaw Thong Jung expects a “sequentially stronger” second-quarter (2Q) outlook for Icon Offshore after the company returned to profitability in 1Q with a net income of RM2.96 million versus a net loss of RM11.15 million a year ago. Revenue grew 31% on-year to RM66.95 million mainly driven by its drilling business, according to a stock exchange filing. The company is projected to report a net income of RM49.2 million for the year ending 2022 from RM22.5 million last year, according to Liaw.