Steel Hawk bidding for more Petronas contracts, eyes green energy expansion

Thursday 19 Sep 2024

KUALA LUMPUR (Sept 5): Oil and gas service provider Steel Hawk Bhd (KL:HAWK), which has transferred its listing to the ACE Market of Bursa Malaysia via an initial public offering (IPO), said the group is bidding for more long-term Petroliam Nasional Bhd (Petronas) contracts and expanding its renewable energy business.

The oil and gas service provider, which was listed on the LEAP Market, saw its share price soar 20 sen to close the morning session at 35 sen, more than double its IPO price of 15 sen per share.

“We are bidding for quite a number of long-term call-out agreement contracts [from Petronas] ranging from three to 10 years,” said deputy chairman and executive director Datuk Sharman K Michael after the listing ceremony at the stock exchange.

Sharman noted that the group is currently undergoing stringent evaluations for these tenders. The company already holds 12 call-out contracts with Petronas, extending through 2027, he added.

So far this year, Steel Hawk has secured three extended contracts from Petronas, including a one-year extension for scaffolding services with E&P O&M Services Sdn Bhd, a one-year extension for pig trap system maintenance with Petronas Carigali Sdn Bhd, and a new scaffolding services contract with Kertih Port Sdn Bhd, a wholly owned subsidiary of Petronas Chemicals Group Bhd (KL:PCHEM).

Nonetheless, the company has made efforts to minimise the dependency on a single client. “We are trying to diversify our customer base within the same sector, but Petronas will remain our key client,” Sharman commented on this.

The revenue contribution from Petronas contracts has been declining over the past three years. From 85.84% (RM21.33 million) of revenue in the financial year ended Dec 31, 2021 (FY2021), it shrunk to 54.47% (RM36.13 million) in FY2022, and 45.64% (RM33.10 million) in FY2023.

Regionally, the company is also working to enter the Indonesian market, but is currently scouting for a suitable partner to comply with Indonesia's oil and gas regulations. “We are looking for a proper partner to build a presence in Indonesia, and hope to establish this partnership in the near future.”

For FY2023, Steel Hawk reported a profit after tax of RM7.22 million, a 24% rise from RM5.81 million in FY2022, as revenue grew by 9.36% to RM72.54 million from RM66.33 million.

This was attributed to higher engineering, procurement, construction, and commissioning (EPCC) services and facilities improvement, as well as supply of the oilfield equipment segment that collectively increased by RM7.74 million or 13.11%, thanks largely to an ongoing fixed contract with PBH Engineering Sdn Bhd.

Expanding into green energy

Steel Hawk added that it will expand its green energy business, with plans to provide more EPCC services for solar and hydroelectric energy projects.

“We are bidding for several [three] solar projects and a hydroelectric project, particularly in Terengganu, where the abundance of rivers offers significant potential,” Sharman said, adding that the focus is primarily on infrastructure development rather than asset ownership.

The projects that the group is targeting have capacities ranging from 2.6 megawatts to 3.5 megawatts.

"We have had one experience in 2019 for Petronas under the Terengganu gas terminal, as we constructed the full EPCC for the solar panels on the roof of the facility of Petronas Carigali. Moving forward, we are trying hard to bid for a lot of solar and hydroelectric jobs," he added.

At the noon break on Thursday, Steel Hawk settled at 35 sen, valuing it at RM172 million.

Edited ByKathy Fong

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