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Home  Story Archive 2008 MTQ: Solid first-half performance
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MTQ: Solid first-half performance |
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Written by Leong Chan Teik
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Tuesday, 04 November 2008
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| | 1HFY09 (S$ m) | 1HFY08(S$ m) | % change | | Turnover | 45.43 | 40.07 | 13.4 | | Profit from operating activities | 8.56 | 3.81 | 124.7 | | Net profit attributable to shareholders | 7.00 | 33.43 | -79.1 |
 Mr Kuah, chairman and CEO of MTQ, at a lunch briefing at Tower Club for analysts and media yesterday. Photo by Leong Chan Teik
FROM THE table above, it can be seen that the net profit of MTQ Corporation plunged 79.1% in the first half ended Sept this year.
But wait, results for the first half of last year included a huge gain from MTQ's divestment of its stake in an Australian company.
Excluding that gain, net operating profit in 1H this year jumped 124.7% to S$8.56 million compared to the same period last financial year.
Other salient points of the 1H results announced yesterday painted a bright picture of the performance of this company, which is a small-cap (market cap: around $45 million) and not widely-noticed:
* Earnings per share (EPS) stood at 7.60 cents.
“We remain cautiously optimistic that we will be able to achieve the same level of profitability for the second half of the current financial year,” said the company in a statement.
Given that outlook, if the second half generates 7.60 or so cents per share in earnings, then the total EPS would amount to 15.2 cents, translating into a PE of about 3X (based on a recent stock price of 45 cents).
* The company has announced an interim dividend of 1 cent a share. If it can sustain the 2-cent-a-share final dividend it paid in the last financial year, then the forward dividend yield is 6.7%.
* Net asset value is 63.33 cents a share, compared to a recent stock price of 45 cents.
MTQ’s statement: “Despite the challenges ahead, demand for the oilfield engineering division remains robust in the near term.”
MTQ repairs and maintains sophisticated offshore oil-drilling equipment at its workshop in Pandan Loop. Its customers operate in neighbouring countries such as Indonesia, Malaysia, Brunei, Thailand and Vietnam.
 MTQ repairs and maintains oil-drilling equipment. Photo: annual report
There has been a substantial amount of equipment deployed in recent years that will continue to need repair and maintenance.
But now that the price of oil has slid from heady heights, customers may have tighter budgets and the desire to negotiate better prices, resulting in lower profit margins for MTQ.
MTQ Engineering is the authorised repair workshop for OEMs such as Cameron, Varco-Shaffer and QVM.
MTQ’s oilfield engineering division contributed 55.8% of the first-half revenue, while engine systems division contributed 43.7%.
The latter division registered flat growth.
MTQ said it is in a good position to weather the economic downturn: “Our balance sheet is healthy with negligible gearing and the operations are generating positive cashflow. In addition, most of our planned investments in major capital equipment have been completed, so funding is not an issue to us.”
 Stock has fallen with the rest of the market.
Mr K.K. Kuah, chairman and CEO of MTQ, said: “It will be naïve for us to think we an be unscathed by this global economic unwinding. The general slowdown in economic activities has already affected our Australian operations. Although the oilfield engineering division has yet to experience any noticeable holding back of orders, we anticipate the operating environment will become more challenging.”
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