not vested
SCOMI has been under the radar for some time. The last two big contracts it bagged were the RM1.85bil Mumbai monorail project in 2008 in a joint venture with India’s Larsen and Toubro Ltd and another job in Brazil worth RM5.6bil in 2011.
The fortunes of Scomi hasn’t exactly been bright. It has been in the red over the last three financial years despite having won big contracts. Its share price is also at one of its lowest points at the 39.5 sen level. Its 52-week low is 38 sen on May 3 last year.
So what is there to look forward to? Proposals have been made for the extension of the KL Monorail to Bandar Sunway. Malaysian Resources Corp Bhd and Syarikat Prasarana Negara Bhd have reportedly submitted their proposals.
Scomi, which built and owns the system of Malaysia’s only monorail, is the technical partner to provide the systems and cars (pic).
For the six months to Sept 30, 2013, Scomi recorded net loss of RM24.97mil on the back of revenue of RM110.85mil.
The results were mainly due to net unrealised foreign exchange losses of RM3.6mil for the quarter and RM18.3mil from both Mumbai and Line 17 projects.
The weakening of the Indian rupee has also resulted in the unrealised losses on the receivables from the client in the Mumbai monorail project.
Scomi’s focus at the moment is to strengthen its presence in Malaysia, India and Brazil amidst intense competition. These countries have committed plans to develop Urban Rail Systems in their major cities.
The rail segment will maintain its focus on the implementation of key projects in Mumbai, Kuala Lumpur and Brazil. Phase 1 of the Mumbai Monorail Project was expected to be commissioned in December 2013.
Catalysts
- Winning new contracts.
- Downside limited as it is already making losses and share price close to 52-week low.
Risks
- Failure to bag new contracts.
- Cost overruns in its existing contracts.
Source: The Star