Steel Hawk soaring to new heights with more upside in sight

Steel Hawk Bhd has been soaring since its debut on the ACE Market on Sept 5. Steel Hawk is the first company that underwent a listing transfer from the Leading Entrepreneur Accelerator Platform — better known as the LEAP Market — to the ACE Market, under the new market transfer framework.

Investors were surely excited over its debut on the ACE Market with doubling of its share price on its maiden trading day. It saw strong demand during its IPO, with the offering oversubscribed by 276.83 times — the highest subscription rate so far this year.

The company is mainly involved in the provision of engineering, procurement, construction, and commissioning services for chemical injection skids, and improvement or maintenance of topside oil and gas facilities. It also sells, installs and maintains oilfield equipment

Steel Hawk’s prospects are bright, underpinned by Petronas’ annual domestic capital expenditure spending as part of its long-term target of growing Malaysia’s oil and gas production.

In addition, the recent discovery of potential hydrocarbon reserves in the Langkasuka Basin located on the west coast of Peninsular Malaysia presents further opportunities for future exploration and development.

Petronas has been its major customer, contributing 85.84% to its revenue for the financial year ended Dec 31, 2021 (FY2021) at RM21.33 million.

Steel Hawk is said to be bidding for more long-term Petronas contracts and expanding its renewable energy business. The company already holds 12 call-out contracts with Petronas, extending through 2027.

It has so far this year secured three extended contracts from Petronas, including a one-year extension for scaffolding services, a one-year extension for pig trap system maintenance, and a new scaffolding services contract. Steel Hawk is looking to diversify its customer base within the same sector to minimise the dependency on a single client.

The revenue contribution from Petronas contracts has been declining over the past three years. From 85.84% (RM21.33 million) of revenue in the financial year ended Dec 31, 2021 (FY2021), it shrunk to 54.47% (RM36.13 million) in FY2022, and 45.64% (RM33.10 million) in FY2023.

Investors hoping to put their money in the oil & gas sector may want to consider Steel Hawk given its orderbook and attempts to diversify its customer base.