Daya ... Dec09

Its first phase of international transformation has begun, kick-started by a memorandum of understanding (MoU) that will see the company recognising revenue from tank service ventures regionally, and eventually in the United States.

Daya Clarimax Sdn Bhd, has entered into an MoU with NCHO Engineering & Services Pte Ltd, a major ISO-certified tank repair and services company based in Singapore. The MoU is expected to materialise in a 60:40 joint venture in Malaysia, focusing on ISO-level tank repairs. Importantly, the joint venture will translate into a ready and sizeable customer base for Clarimax when it begins operations early next year.

NCHO is already operating one of the largest tank repair businesses in Singapore, servicing some of the biggest multinational tank owners in the world. With the signing of the accord, some of these multinational customers will instantly become Daya’s customers.

The attraction of this JV is that it is very scaleable and allows Daya to jointly participate in tank service ventures with NCHO in Indonesia, Taiwan, China and eventually the US, which are several times the size of the Malaysian market,” said Daya executive vice-chairman Datuk Mazlin Md Junid.

Clarimax, which has not yet contributed to the group’s bottom line, will make significant revenue and net profit contribution in 2010 and beyond with this JV.

Significantly, too, Clarimax is laying the foundation for its solvent recovery and waste-oil recycling business towards the end of 2010. It is believed to be one of only two or three players in Malaysia that have a licence from the Environment Department to undertake this business.

It is in a net cash position despite the acquisitions of 80% of Daya Proffscorp Sdn Bhd in April and 45% of Daya Clarimax in September, collectively valued at more than RM28mil.

With over RM30mil in cash, significant unused debt capacity and a further RM20mil coming in from strategic private equity fund CMS Opus Capital by end-November, the group was eyeing several acquisitions in the oil and gas (O&G) sector, especially in downstream services.

It is currently the largest supplier of downstream specialist chemicals in Malaysia.
It expanded into Brunei in the second quarter, and is aiming to penetrate Singapore and Indonesia within the next two quarters.

There is also a strong possibility of the group venturing into Western Australia, selling the same chemicals the group has been distributing for the past 10 years in Malaysia.

Daya is also in the midst of institutionalising its stock to broaden its investor base. To this end, Daya is looking to attract institutional investors, especially bumiputra funds, to be its long-term strategic partners.

For the third quarter to Sept 30, Daya reported a 70% jump in pre-tax profit to RM6.4mil from RM3.7mil previously. On a nine-month basis, Daya delivered a pre-tax profit of RM16.4mil.

The growth was achieved on the back of stronger performance at its oil and gas and technical services divisions.