Coming back to life

  • BUY Entry – 0.072 Target – 0.085 Stop Loss – 0.066
  • MMT is Thailand-based but SGX-listed company that provides drilling and sub-sea engineering services for the offshore & marine industry. The company’s subsea engineering segment services clients mainly in Southeast Asia and the Middle East. 
  • Dismal performance from 2014-2020. MMT’s share price has significantly underperformed the broader market since 2014, when oil prices collapsed due to oversupply from US shale production.
  • Light at the end of the tunnel. Ironically, the global push towards renewables is helping to lift oil prices higher. The decline in capex to replenish depleting oil wells, combined with massive stimulus policies to prop up the global economy, are creating a favourable environment for oil prices going into 2H 2021. Brent is now trading above US$70 a barrel, surpassing pre-Covid levels. 
  • Saudi Arabia is signalling tight supply ahead. Aramco raised prices for July’s shipment for Arab Light for Asia by 20 cents to US$1.90 above the reference benchmark, compared to a 10 cents raise expected by consensus. OPEC is also forecasting that oil stockpiles will decline rapidly from August 2021 as lockdowns ease across major economies. 
  • Capital raising of as much as US$62mn. The company last week announced a rights and warrant issuance which would raise capital to fund the expansion of its business. It has proposed an issue price of S$0.07 for each rights share on the basis of one rights share for every 20 existing ordinary shares. Shareholders will also receive 10 free detachable warrants for every one new ordinary share at an exercise price of S$0.07 per warrant. Read the full announcement here
MMT SP (Source: Bloomberg)