This article first appeared in The Edge Malaysia Weekly on October 23, 2023 - October 29, 2023

CONGLOMERATE Samling Group is looking to take over Sarawak state-owned Brooke Dockyard and Engineering Works Corp, according to sources familiar with the matter. “It’s practically a done deal,” says one of them.

Brooke Dockyard is involved in the oil and gas (O&G) sector and its core businesses include shipbuilding, ship repair, bridge infrastructure and onshore manufacturing. It is also one of the nine fabricators licensed by Petroliam Nasional Bhd (Petronas) in the country.

In a written reply to The Edge’s request for comment on the matter,  Samling says it is always on the lookout for mergers and acquisitions opportunities. “With specific regards to the takeover of Brooke Dockyard, however, at this point, we have no comment to make to the media,” it says.

Brooke Dockyard has two fabrication yards — Sejingkat Fabrication Yard and Demak Fabrication Yard — each measuring 20 acres and having a combined annual capacity of 25,000 tonnes. The water depth is 10m at Sejingkat, while it is 11.8m at high tide and 6m at low tide at Demak Fabrication Yard. There is also capacity for expansion at the Sejingkat Fabrication Yard.  

This isn’t the first time Brooke Dockyard has come up for sale. In 2020, it was reported that Serba Dinamik Holdings Bhd was looking at acquiring the firm amid the latter’s financial troubles. That deal did not materialise and the company ended up with a 170-acre fabrication yard in Teluk Ramunia, Johor, which it acquired from Petronas for RM320 million that year.

Brooke Dockyard’s fabrication yard is small compared with those of other Petronas-licensed fabricators. For example, Petronas-controlled Malaysia Marine and Heavy Engineering Holdings Bhd’s fabrication yard in Pasir Gudang, Johor, spans 495 acres while Sapura Energy Bhd’s fabrication yard in Lumut, Perak, is 273 acres.

In terms of size, the closest Brooke Dockyard comes to is cash-strapped TH Heavy Engineering Bhd’s 57-acre fabrication yard in Pulau Indah, Selangor.

Other companies with fabricator licences from Petronas include Boustead Heavy Industries Corp Bhd, Muhibbah Engineering (M) Bhd, Dialog Group Bhd and KKB Engineering Bhd.

Market observers believe that Samling will benefit from taking over the state-owned O&G engineering company, given the major energy-related contracts in the the state. This includes a carbon capture and storage facility and the Lang Lebah gas field off the coast of Miri that is expected to come on stream in 2027.

“These are billion-ringgit contracts and will definitely benefit Samling if they take over Brooke Dockyard,” says a source.

If the acquisition materialises, it would mark a re-entry of Samling’s Yaw family into the O&G fabrication scene.

In 2016, Datuk Seri Yaw Chee Siew, the son of Samling’s patriarch Tan Sri Yaw Teck Seng, took Singapore shipping company Otto Marine Ltd private via his vehicle Ocean International Capital Ltd after taking over 38.8% of Otto Marine that he did not own at 32 Singapore cents per share, or a total of S$26.37 million.

However, by early 2018, Otto Marine’s financial woes had taken a turn for the worse as it found itself saddled with US$887 million in debt and turned to the Singapore High Court for protection from its creditors. Court papers then revealed that Chee Siew was the single largest creditor of the shipping company with US$208 million due to him and affiliates.

By end-March 2015, Otto Marine was placed under judicial management. It subsequently entered liquidation on Oct 5, 2018.

The Yaw family has built up a sprawling business empire that has interests in logging, plantations, property development and automotive, among others. The patriarch and his son Chee Ming are jointly listed as Malaysia’s 16th richest people by Forbes this year.

Samling Group has Samling Strategic Corp Sdn Bhd, and Glenealy Plantations Sdn Bhd under its belt. 

A company search on Samling Strategic Corp reveals that the company had net assets totalling RM1.95 billion as at Dec 31, 2022. For the financial year ended June 30, 2022 (FY2022), the company reported revenue of RM2.92 billion and a net profit of RM167.03 million. 

As for Glenealy Plantations, a palm oil producer in Sarawak, it made a net profit of RM176.09 million on revenue of RM667.94 million in FY2022. Previously listed on Bursa Malaysia, the company was taken private in 2012. 

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