Renaissance back in favour with investors
Investors are showing renewed confidence in the long-term growth prospects of Renaissance Services, the oil services company based in Oman.
The company is projected to earn a profit of about 30.5 million rials next year. That forecast is up significantly from a previous estimate of 16.7 million rials, according to data compiled by Bloomberg News.
The company's share price increased more than 6 per cent on the Muscat Securities Market yesterday, closing at 0.698 rials.
The positive performance followed a 7.7 per cent increase in its share price the previous day.
The value of Renaissance's stock has rebounded more than 30 per cent since it hit a low for the year almost two weeks ago, following the company's reaction to news of a fraud investigation involving an overseas subsidiary of its Topaz Energy and Marine unit, which is based in Dubai.
Renaissance said its investigation had centred on US$2.9 million of cash over a six-and-a-half year period, with "a portion" of that amount that appears to have been connected with fraud or misappropriation.
Analysts credit the company's revived share price on "being transparent in how they're dealing with it [the alleged fraud]", said Saleem Khokhar, an analyst and the head of equities at the National Bank of Abu Dhabi.
"Now that we have some clarity on what's involved in there, we're looking at about $3m, which is much less than what the market had feared," he said.
Renaissance said a junior level finance manager linked to the alleged fraud had been dismissed.
"What they've done is taken the right moves in terms of removing management that was implicated in this," said Mr Khokhar.
The resurgence in Renaissance's shares, as well as other companies publicly traded in Oman, has helped the country's MSM30 Index to climb more than 6 per cent since it hit a low more than two weeks ago.
The MSM30 Index increased more than 1.1 per cent yesterday, to close at 5,767.35.
Published: August 30, 2011 04:00 AM