SMJ Energy Sdn Bhd (SMJE) has announced RM259 million net profit for the year ended 31 December 2023, a significant leap from RM7 million net losses the previous year as a start-up.
The remarkable performance was primarily driven by substantial dividends from its wholly owned subsidiary, Sabah International Petroleum Sdn Bhd (SIP), predominantly from its 10 per cent interest in a lucrative Petronas LNG9 (PLNG9) investment.
The LNG9 investment was transferred to SMJE in February 2024, it said in a statement.
Additional contributions include share profits from SMJE’s 25 per cent interest in the SAMUR petrochemical plant and crude oil sales from its 50 per cent interest in the Samarang Production Sharing Contract (PSC).
After acquiring SIP, SMJE made its first-year net after-tax profit of
RM100 million on a consolidated basis after eliminating the effect of intragroup dividends.
For fiscal year 2023, the SMJE Group achieved gross revenue of RM944 million, mainly attributed to Oil and Gas sales from Samarang PSC.
The Group concluded the year with a positive cash balance of RM250 million and Total Gross Assets of RM5.1 billion.
“We are proud to have very reputable and respected professionals serving the SMJE board and management team, ensuring robust corporate governance and a strategic growth plan focused on profitability”, said Datuk Seri Masidi Manjun, Minister of Finance Sabah and Chairman of SMJE.
The company’s prudent financial management is evident in its paid-up share capital of RM50 million by mid-2023 and the declaration of its inaugural dividend of RM50 million to the Sabah State.
SMJE also contributed RM36 million in Sabah sales tax to the Sabah Ministry of Finance coffer in 2023.
He noted that SMJE’s acquisition of SIP in 2023 has proven to be highly profitable and value-accretive due to the strong dividend flow from LNG9 for the next 13 years.
Restructuring SIP’s substantial legacy debts through Sukuk refinancing at a significantly lower interest rate has dramatically reduced borrowing costs, achieving over RM60 million in interest savings in 2023 alone.
SIP will now refocus on its core business of floating production storage and loading services.
“The settlement of SIP legacy loans with Sabah Development Bank also enables the bank to manage its high-cost bond repayment obligations better and redeploy financial resources to support other development projects in Sabah”, Masidi said.
Sabah Government signed the Commercial Collaborative Agreement (CCA) with Petronas on 7 Dec 2021, giving the State greater revenue sharing, greater say and greater participation in the oil and gas value chain in Sabah.
SMJE has been entrusted by the State Government to implement the CCA in the best interest of Sabah state.
SMJE completed the acquisition of a 50 per cent participating interest in the Samarang PSC on 31
May 2023 and signed a Sales & Purchase Agreement with PETRONAS Chemicals Group Bhd on 25 April 2023 for the acquisition of a 25 per cent participating interest in the Sabah Ammonia Urea (SAMUR) petrochemical plant.
Several major projects are in the pipeline and will be announced soon.
SMJE’s success story was further bolstered by its AAA-rated Sukuk issuance of RM900 million in October 2023, which was oversubscribed nearly four times, marking the year’s most successful non-IPO fundraising.
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