Daya Materials ... Mar 09

While most companies are tightening their belts to ride the current global economic storm, Daya is busy scouting for potential acquisition targets abroad.

The company wanted to build a global presence and was eyeing oil and gas (O&G) companies in the US, Australia and China for acquisition or partnership.

With cash reserves of RM40 million, against borrowings of RM20 million, the company had the advantage and financial means to grow various parts of its business to become a full-fledged upstream and downstream market leader for O&G-related services.

With the current economic crisis, the valuations of some O&G companies have become very reasonable. Now (March 2009). The downturn has enabled Daya to pursue sensible acquisitions which were not possible before and are extremely excited about these prospects.
The DMB Group, which has a workforce of about 300, posted an 84% jump in net profit on-year to RM12.57 million for the financial year ended Dec 31, 2008, on the back of a 260% surge in revenue to RM224.11 million.

The company had made several acquisitions since it was listed on the Mesdaq Market on July 25, 2005 and is now (March 2009) a big player in the polymer market and the largest supplier of downstream chemicals for O&G industries in the northern region.

In August 2007, DMB acquired a 100% stake in Seca Dyme Sdn Bhd, a chemical and services company, at RM24 million and three months later, it acquired a 30% stake in CMT (Penang) Sdn Bhd, an engineering and construction company, at RM7.2 million. It also bought a 33% stake in a tank cleaning, repair and recyling specialist, Clarimax, at RM367,000.

In 2008, it acquired the remaining stake in CMT for RM19 million and a 20% stake in Proffscorp Sdn Bhd, a machineries leasing services provider, for RM5.3 million. It has since obtained shareholder approval to acquire the remaining 80% equity in Proffscorp at RM22.8 million.

Kemaman-based Proffcorp is the largest mobile crane and lifting service provider for country’s O&G sector.

DMB would also leverage on its expertise in design, engineering and construction of industrial plants for the O&G industries.

While some of the sectors of the O&G are affected by the current economic downturn, DMB’s expertise in tank cleaning services and crane operations was in demand as many of its customers undertook these services due to the slowdown.

DMB has teamed up with Singapore’s Chem-Solv to set up a tank services facility in Pulau Indah, Port Klang and will be starting its operations this July 2009. The facility will offer recycling of waste oil and solvent, tank cleaning, repair and refurbishment services.

At the end of 2008, DMB signed an agreement with Tianjin-based CNOOC Energy Technology & Services-Oilfield Technology Services Co to become a distributor of the latter’s products including oilfield chemicals, petrochemical additives and drilling fluids. DMB aimed to grab at least 15% to 20% share of the local oilfied chemicals market over the next few years with the introduction of CNOOC’s (China National Offshore Oil Corp Ltd) products..

It hopes that his will be our springboard to move upstream and we want to enlarge our offering to our customers in O&G industries with one stop service, packaging all the services they would ever need at one go.

From being just a supplier of downstream chemicals to the O&G industries, they want to add more upstream products and services, as in the long run, this will be much more profitable once we break into the market.

The venture into upstream products would contribute at least 20% towards its revenue from the O&G sector.