MTQ Corporation

Very encouraging 2Q result...
https://links.sgx.com/FileOpen/MTQ_2QFY2...eID=583605
https://links.sgx.com/FileOpen/MTQ_2QFY2...eID=583606

The disposal of Neptune for both cash and MMA’s share, plus recent quarters results. I do think it looks positive =)

MTQ: Potential 24% Yield, 72% Upside In 12 Months?

Written by Brian Halim
Published: 11 February 2020

I decided to get vested in this company after they announced their Q3 results last Friday and I think there's further room to run for this stock in the next 12 months and beyond.

MTQ Corporation Limited (SGX: M05) is in the business of oilfield engineering and engine systems. A few of their main core services include OEM, drilling contractors, servicing, rig owning and others. Some of their main customers include Cameron, Halliburton, Seadrill, Total Oil, etc.

From 2015, they faced a huge challenge --  the company registered losses for the next 4 years from FY2016 to FY2019 due to oil prices plummeting and some poor M&A which didn't work out well.

In the latest Q3 results, we have seen a huge improvement in their organic business which further strengthens the thesis that the company could be a nice turnaround play for the next 12 months and beyond.

In any case, I have decided to put some money in this stock which to me seems fairly cheap and might reward investors with good decent upside in the next 12 months.

5 key reasons why I decided to get vested in this company.
1.) Turnaround in Core NOPAT in Q3
2.) Divestment of Non-Performing Neptune Segment
3.) Oil Price Has Been Suffering Trough YTD
4.) Valuation Is Attractive
5.) Dividends Reinstated & Potential For Special Dividend

More details in https://www.nextinsight.net/story-archiv...-12-months

I have no idea about the profitability on MTQ's current order, and the profitability of their orders over the next 12 months or so. Unless you do, I'm not sure if it is prudent to extrapolate a quarter's earning into the future.

And if you can't be certain about profitability, any talk about dividends is premature. Are we counting the chicks before the eggs are even laid?

Perhaps the author of the above article has insights on the profitability question. If so, sharing those insights may be more helpful to his cause. A lot of what was written must be acknowledged as speculative (oil price may go up, turnaround may continue, dividends may be reinstated).

Based on current share price, MTQ is now valued at book (1x p/b). For a company which has just only returned to profitability, the market seems very optimistic of its future prospects. Hence, I think it might be a stretch to say that the valuation -- based on the company's present financial condition and performance -- is attractive.

(12-02-2020, 07:58 PM)cyclone Wrote: MTQ: Potential 24% Yield, 72% Upside In 12 Months?

Such heading is misleading, irresponsible, and should not be relied upon at all. Besides, the underlying article is not written by a trained and experienced stock analyst from a rated house, and there is no evidence that the author has interviewed MTQ's management.

Profit guidance

"the Group is likely to recognise a goodwill impairment charge (“Impairment”) and certain provisions (“Provisions”) primarily with respect to the Premier Group cash-generating unit.

The Impairment and Provisions will result in an accounting loss for FY2021. Excluding these non-cash charges, the Group is expected to be profitable for FY2021 and to remain in net cash position as at 31 March 2021 nonetheless."


Some numbers from HY2021

Net Profit $2.493m
Government Grants $2.5m
Cash $19.1m
Goodwill $7.896m
Debts $14m (down from $21m)
Div paid $1.08m (0.5cts per share)

(13-03-2021, 11:16 AM)TerryT Wrote: Profit guidance

"the Group is likely to recognise a goodwill impairment charge (“Impairment”) and certain provisions (“Provisions”) primarily with respect to the Premier Group cash-generating unit.

The Impairment and Provisions will result in an accounting loss for FY2021. Excluding these non-cash charges, the Group is expected to be profitable for FY2021 and to remain in net cash position as at 31 March 2021 nonetheless."


Some numbers from HY2021

Net Profit $2.493m
Government Grants $2.5m
Cash $19.1m
Goodwill $7.896m
Debts $14m (down from $21m)
Div paid $1.08m (0.5cts per share)

Companies are known to make huge provisions and writing off goodwill during a downturn, thus cleaning up the books to present market value. 

However, need to see that they are generating cash operationally post the impairment exercise to ensure that there is future growth in the company.  Based on the announcement,  MTQ stated that they are operationally profitable.

Interesting video..
https://www.youtube.com/watch?v=uvUv_08joTA

MTQ Bahrain has an impressive operations.