This article first appeared in The Edge Malaysia Weekly on February 17, 2025 - February 23, 2025

A block of shares equivalent to about 22% stake in Reservoir Link Bhd (KL:RL), is said to be up for sale, including the 19.47% held by its major shareholder, Reservoir Link Holdings Sdn Bhd (RLHSB).

Sources indicate that one party has already expressed interest in acquiring the stake.

“There is already a party showing interest in the block, but it is unclear what the stage of the negotiation is,” says a source. 

The identity of this potential buyer remains unknown. The block on offer could be larger than 22%, another source says.

Reservoir Link declined to comment on the matter when contacted. The Edge understands that other parties are also eyeing the stake.

Reservoir Link’s shares closed at 36 sen last Friday, giving the company a market capitalisation of RM117.22 million. At that closing price, the 22% stake would be worth about RM25.79 million.

RLHSB is a vehicle of Reservoir Link CEO Datuk Wan Hassan Mohd Jamil, deputy chairman Thien Chiet Chai and RLHSB CEO Mad Haimi Abu Hassan.

Wan Hassan also directly holds 1.99% of Reservoir Link, while Thien owns 5.43% and Mad Haimi has 0.78%.

Another substantial shareholder in Reservoir Link is Sarawak-based engineering solutions provider Pansar Bhd (KL:PANSAR), with 8.75%. Pansar’s managing director, Datuk Jason Tai, also serves as Reservoir Link chairman.

Reservoir Link was listed in July 2020 at 41 sen. At the time of listing, its substantial shareholders were RLHSB (36.84%), Thien (13.38%), Pansar (10.39%), Wan Hassan (5.18%) and Mad Haimi (1.69%).

According to Reservoir Link’s website, it operates in the upstream oil and gas (O&G) sector, covering exploration, appraisal, development, production, and plug and abandonment.

It is also active in the renewable energy sector through its subsidiary, Founder Energy Sdn Bhd, in which it acquired a 51% stake in 2021. The company reports having completed more than 1.5gw of solar projects so far.

Last October, Reservoir Link listed Founder Energy on Nasdaq. Following the listing, Reservoir Link’s shareholding in Founder Energy dropped to 45%.

For the first quarter ended Sept 30, 2024 (1QFY2025), Reservoir Link reported a net profit of RM684,000, about half of the RM1.22 million profit it made in 1QFY2024. This was due to a 36.59% drop in revenue to RM42.92 million from RM67.69 million.

The group attributed the lower revenue to its renewable energy (RE) segment. During the quarter, its O&G business contributed 62% to the group’s revenue, while the remaining 38% came from the RE segment.

For the financial year ended June 30, 2024 (FY2024), Reservoir Link fell into the red with a net loss of RM836,000, compared with a net profit of RM5.53 million in FY2023.

As at Sept 30, Reservoir Link had total assets of RM229.19 million, total borrowings of RM72.41 million as well as cash and fixed deposits of RM20.10 million.

According to a report by BIMB Securities Research dated Nov 28, 2024, Reservoir Link’s order book stood at RM210 million — RM150 million from the O&G segment and RM60 million from the RE business.

Despite the weaker earnings in 1QFY2025, BIMB maintained its earnings forecast for Reservoir Link for FY2025, citing the “eventual rollout of solar projects and commencement of the integrated well continuity services (IWCS) contract in the O&G segment”, where revenue recognition could be lumpy.

BIMB kept the stock on “hold”, with a target price of 33 sen — which Reservoir Link has already surpassed — implying a price-earnings ratio of 10 times the FY2025 forecast.

“We remain optimistic about the company’s outlook, primarily because we expect the company to be one of the beneficiaries of the expected rollout of the 800mw Corporate Green Power Programme and 2gw large scale solar 5 projects.

“Note that the company has been selected as one of 34 panel contractors to participate in Petronas’ IWCS contract. We believe this bodes well for its earnings outlook,” BIMB wrote. 

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