iSaham Daily Highlights

10-June-2021
07-Jul-2021

Image: AZoMaterials
 Sector Trends

iSaham Highlights
As of today, all the sectors were bearish. The least bearish was REITs and MyETF sectors with trend strength of 0.0. Meanwhile, Steel
sector led the global sector with a strength of 3.39, followed by Building Materials with the strength of 2.07.
 Acquiring Australian heavy equipment rental provider
Acquiring Salmon Earthmoving for RM327m

● Sime Darby is acquiring a 100% stake in Australian-based Salmon Earthmoving Holdings (Salmon Australia) for AUD$104m
(RM327m) via internal funds and borrowings.

● Salmon Australia provides heavy and industrial equipment rental and maintenance services for the civil construction,

iSaham Highlights
agricultural and mining sectors in Australia. SIME will also retain Salmon Australia’s management team under the acquisition
agreement.

Aiming to capture higher wallet share from miners

● SIME believes Salmon Australia provides a good opportunity to complement their industrial equipment division, given that they
create a new monetisation stream to capture a higher wallet share from the Australian miners through expansion into
adjacencies.

● SIME also highlighted that the acquisition will also help expand their industrial equipment offerings into the construction
segment, given that Salmon Australia already has strong existing relationships with constructors in Australia. To recap, SIME
currently derives c.70% of their Australian industrial division sales from mining activities.

● Overall, analysts think this is a good diversification strategy for SIME to strengthen their position as a leading integrated
industrial equipment service provider in Australia.

Source: Analyst Report

 Construction Sector

Possible bright spots to come from small/medium scale jobs

1H21 contract awards driven by small/medium scale projects

● Analysis of the Construction Industry Development Board (CIDB) contract award statistics for 1H21 point to four key trends YTD:
i) most contract awards came from small/medium scale projects under Budget 2021, ii) infrastructure projects, which made up
21% of total RM48 billion value of awards in 1H21 were largely non-public transport related (rail), iii) private sector projects
accounted for 65% of total value of contracts awarded, and iv) public sector projects made up 35% of total value of contracts
awarded.

iSaham Highlights
Civil works/infrastructure contracts remain on a downtrend

● The value of civil works/infrastructure-type contracts awarded is likely to continue its downtrend in 2021. Based on analysts’
view, the RM10 billion total value of infrastructure contracts awarded in 1H21 is unsustainable in 2H21F, due to the disruptions
from the nationwide FMCO and the ongoing EMCO in Selangor and Federal Territory.

Overall job flow outlook weighs on FMCO/EMCO earnings risks

● The analysts expect the FMCO/EMCO to weigh on the job award outlook in 2H21F, in addition to potential earnings risks posed
to contractor’s existing order books due to: i) 2-week stop work order, ii) 60% limit to site workforce capacity, and iii) constraints
on building materials supply chain.

● The analysts also expect possible bright spots to come from the award of small/ medium scale infrastructure (civil works) under
Budget 2021 and selective contracts in Sabah/ Sarawak.

Source: Analyst Report

 Private Placement
Announced Date: 07-Jul-2021

Company Main Utilisation Proceed Stage Number of shares

SJC Business/ investment opportunities Proposed private placement 8,106,666

iSaham Highlights
Price-fixing at RM0.037 per
HUBLINE Partial repayment of borrowings 390,003,014
placement share

BRAHIMS Working capital Final tranched completed 70,885,600

 Stock Trivia
Major in offshore topside maintenance services

Core Business Growth: Latest projects secured (2021)

Contract Value
Client Description Duration
(Mil.)

iSaham Highlights
Petronas’
Offshore
Petroleum
Support Vessel RM 20 – RM26 1 year
Arrangement
(OSV) Services
Contractors’ (PACs)
Hook up & commissioning Charter marine vessels

Provision of
Sarawak Shell and Topside Major
RM 100 3 years
Sabah Shell Maintenance
Services

Key Risk: Seasonal monsoon weather

Maintenance services Minor fabrication operation
The offshore topside maintenance operations are normally affected
by bad weather at the beginning and the end of the year.