Technics Oil & Gas

Technics Oil & Gas: has a new substantial shareholder in Eversendai Corp (EVSD MK), a Msian-listed integrated structural steel turnkey and power plant contractor with mkt cap of RM 1b. Eversendai says the acq allows it to secure a stronger footing in the oil and gas fabrication sector, and is inline with its business plan to venture into inter-related sectors. DMG believes Eversendai will continue to raise its sh/h in Technics from the current 13.6% to above 20%, as i) Eversendai is in a strongly net cash position with RM 158m of net cash, ii) at 20%, Eversendai can perform equity acctg of Technic’s strong results and most likely get a board seat, and iii) potential synergies, as Eversendai now performs structural steel fabrication and wishes to enter the oil & gas industry DMG says Technics will not be issuing new shares; recent trading suggests that Eversendai is building up its stake from the open mkt, as there have been no announcements on changes in ownership levels of current large owners. The house maintains Buy with TP at $1.20, pegged to 12x FY13e P/E.