It's all be quiet on the ESSO front since the announcement and approval of the sale of the 65% controlling stake in Esso Malaysia by its principal, Exxon International Holdings to San Miguel Corporation of the Philippines.
The share price went ballistic on the take-over announcement touching RM5.97 from a low of RM2.85 during the ensuing year. The price of ESS0 has moved up from a low price of RM3.30 during the last 26 weeks to RM4.23 before falling back to the RM3.00 level once more.
It has been gathering strength during the last three months and touched RM3.84 on 17 February.
Today the counter took a fall when the quarterly results was announced. It fell 8 sen to RM3.76. However, there was no panic selling for this blue chip. In fact, for many, it represent a buying opportunity.
Looking at the quarterly results ending 31 December 2011 as compared to the corresponding period last year, it would seem that the net profit has sunk by 2.8 times.Similarly EPS has dropped from 0.45 sen to 12.8 sen.
It can be seen clearly that cost of sales viz-a-viz revenue is very high; equivalent to 96%, causing net profit to deflate to RM120,653 compared to gross profit of RM265,695 attained in 2010.
On a yearly basis,cost of sales viz-a-viz revenue for the current period is also high equivalent to 95% of total revenue.In 2010, this was about 90.7%.
Now that the 'not so good' news is out, what is left will be what has San Miguel in store for minority shareholders
after buying the share at RM3.50.
Esso has now taken a political label since Mirzan Mahathir holds a substantive share in this brewery corporation.Will a de-listing be expected with a boon for minority shareholders?
I think speculation will move the price up. It is a matter of time now.
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