KUALA LUMPUR (Aug 10): Salcon Bhd announced that Kunci Sempurna Sdn Bhd (KSSB) will be acquiring a 51% stake in its subsidiary, Salcon Petroleum Services Sdn Bhd (SPSSB), which will allow the two companies to collaborate and likely pave the way for Salcon’s venture into the oil and gas sector.

In a filing today, Salcon (fundamental: 1.65; valuation: 1.8) said SPSSB has increased its issued and paid-up share capital from RM2 to RM100,000 by way of allotment of an additional 99,998 shares of RM1 each, which saw 51,000 shares allotted to Kunci Sempurna for RM51,000, cash.

Kunci Sempurna, incorporated on March 18 as a private limited company, is owned by Syed Feisal Alhady (99%) and Rizalmanudin Sukri (1%) and is principally engaged in investment holding activities.

The water and wastewater engineering-focused Salcon, meanwhile, gets the remainder 48,998 shares for RM48,998, which effectively brings its 100% shareholding in SPSSB previously to 49% of 49,000 shares.

“The reduction represents an opportunity for Salcon to work with the strategic partner i.e. KSSB, who has the expertise and experience in oil and gas industry,” said Salcon.

With the reduction of Salcon’s stake, SPSSB ceases to be a subsidiary and becomes an associated company of Salcon.

It said the exercise will not have any material effects on its earnings per share, net assets per share and gearing for the financial year ending Dec 31, 2015.

It was previously reported in June that Salcon would be sitting on a cash pile of RM310 million after divesting of its water concessions in China and was on the lookout for good investments.

At the time, the company had cash of RM270 million after having completed the disposal of eight of nine water concessions in China, with the last concession in Shandong expected to be resolved by the third quarter and bring in another RM40 million cash.

Salcon closed 2 sen or 2.7% lower at 72 sen, bringing its market capitalisation to RM499.24 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)