Deleum eyeing expansion into Thailand, Vietnam
KUALA LUMPUR: Integrated upstream oil and gas player Deleum Bhd is looking at expanding to more countries within South-East Asia, particularly Thailand and Vietnam, following its proposed acquisition of a 70% stake purchase in an Indonesian valve solutions provider.
“We are looking at many opportunities, but you’ve got to make sure that at the same time not bite more than you can chew, so we’re mindful of that,” said Deleum group chief executive officer (CEO) Ramanrao Abdullah at a press conference after a signing ceremony to formalise the stake acquisition.
However, he declined to comment on whether the company is in talks with potential targets in the two countries for merger and acquisition opportunities.
Ramanrao highlighted that Deleum boasts a strong balance sheet with cash and bank balances of RM96.93mil as at Sept 30, 2024 while its borrowings stood at RM15.37mil.
For now, Ramanrao said Deleum remained focused on growing the domestic and Indonesian markets, which offer huge potential.
Deleum entered into an agreement yesterday to buy the 70% stake in PT OSA Industries Indonesia from OSA Industries Pte Ltd for US$7mil (RM31.3mil). The deal is expected to be completed by the first half of 2025.
The transaction follows the heads of agreement signed between Deleum’s unit with five parties, including PT OSA and its shareholders, in March this year to undertake due diligence.
PT OSA is the sole channel partner for Baker Hughes valves in Indonesia, whereas Deleum’s 51%-owned subsidiary Penaga Dresser Sdn Bhd is the sole channel partner for Baker Hughes in Malaysia.
“In terms of market size, in Indonesia from an operating expenditure standpoint, we’re not talking about capital expenditure, it’s about US$52mil in comparison to Malaysia of about US$25mil. So, there’s a lot of opportunity in terms of the size of the market to tap into,” Penaga Dresser CEO Azman Jemaat said.
He revealed that Deleum had a 36% market share for control valves in Malaysia, and 22% for pressure relief, while PT OSA commanded 11% and 5%, respectively, in Indonesia.
“If we were to use our current market share in Malaysia as a benchmark, that could be achieved (for PT OSA in Indonesia) within maybe the next five years,” Azman added.
According to Ramanrao, its foothold in Indonesia would enable Deleum to offer other products there such as chemicals.
“Our expanded team and established presence across the two countries present the invaluable opportunity not only to tap into the dynamic valves market in South-East Asia, but also extend our coverage beyond existing product lines.
“The ongoing and planned investments in oil and gas infrastructure, coupled with increased energy demands resulting from accelerating economies, augur well for the prospects of the valve sector in the region.
“There are other opportunities that we’d like to tackle, especially on chemicals. We are very successful in Malaysia in the chemicals business,” he said.
Deleum’s specialty chemical and well stimulation unit provides specialty chemicals and well stimulation services, offering chemical solutions for production enhancement, flow assurance, integrated pipeline cleaning, tank cleaning, well pumping services, well analysis and consultation.
As of now, the PT OSA stake acquisition would boost Deleum’s bottomline significantly, as the Indonesian company is giving a profit guarantee of US$2.7mil (RM12.1mil) for financial years ending Dec 31, 2024 (FY24) and FY25.
Deleum registered a huge jump in net profit of RM25.07mil in the third quarter ended Sept 30, 2024 (3Q24) from RM12.21mil a year ago, while revenue rose 11.33% to RM269.22mil from RM241.82mil.
PT OSA recorded a net profit of RM2.7mil for FY23, RM3.04mil for FY22 and RM3.5mil for FY21 on the back of revenue of RM33.55mil, RM28.38mil and RM23.2mil, respectively.