MTQ Corporation

Share price seems to have factored in this negative news.

MTQ's share price had hardly moved since the last week of Aug10, with sporatic selling by shareholders who needed money or lost patience or for whatever other reasons, well absorbed by buyers.

Would a change of leaders or government in Bahrain permanently change the economics or future viability of MTQ's new service facility there? Unlikely, unless the whole country of Bahrain or Middle East blows out - like a sudden rush of oil or gas from a well!

Related but yet, unrelated, SIAEC also has a maintenance JV in Bahrain.

(17-02-2011, 08:38 PM)dydx Wrote: MTQ's share price had hardly moved since the last week of Aug10, with sporatic selling by shareholders who needed money or lost patience or for whatever other reasons, well absorbed by buyers.

Would a change of leaders or government in Bahrain permanently change the economics or future viability of MTQ's new service facility there? Unlikely, unless the whole country of Bahrain or Middle East blows out - like a sudden rush of oil or gas from a well!

Apparently things in Bahrain are getting somewhat worse, and there have been violent clashes between protesters and the police. Some people have even got killed. Whether this will translate into a political crisis which will affect the economy and companies operating in Bahrain is stil uncertain at this point. The dangers are real and we should not discount them too quickly without monitoring the situation and being appraised of the latest news.

Incidentally, I dropped an email to their IR (Mr. William Fong) and they said that most of the physical infrastructure has already been moved into place at the new location. They also said they are monitoring developments, but gave no further details.

There were some "desperate" sellers who cashed out at 89.5 cents today, probably they were frazzled by the ongoing problems in the Middle East and decided that enough was enough. It will be at least until May 2011 before the Company releases its FY 2011 results and gives an update on the situation. Of course, it can always release some updates on SGXNet in the interim if it wishes to update shareholders.

MTQ is mentioned in today's ST Money section regarding violence in Bahrain. I am also a little concerned as Boustead has a presence in Libya's Al Marj as they are there building a Township.

Feb 19, 2011
S'pore firms in Mid-East stay calm
They are monitoring the situation but are not about to pack up and go
By Aaron Low

JUDGING by the shocking television images of Bahrain, Singapore businessman Kuah Kok Kim should have given serious thought to fleeing the tiny violence-hit Middle Eastern kingdom.

Instead, he spent yesterday playing golf, meeting potential clients and calmly rounding off the day with a gala dinner. He then headed back to his regular lodgings at a downtown hotel.

It was, in fact, a typical day on the job for the executive chairman of oil and gas firm MTQ Corporation - except, of course, that he was in Bahrain, the latest Middle Eastern nation to be hit by unrest.

This culminated in a bloody crackdown in the middle of the capital on Thursday, which left at least five dead.

He said roads were quiet in the wake of the violence, and there was tension in the air.

However, Mr Kuah, whose firm is building a factory on the outskirts of the capital, said his business is unaffected.

'My factory is on the outskirts of the country. Roads around the area are blocked, but life goes on,' he said, adding that he was not taking extra precautions.

'Yes, we avoid the parts where the demonstrations are taking place, but we continue working while our factory is being built.'

The unrest in Bahrain is the latest in a wave of unrest that has erupted in North Africa and the Middle East, following popular uprisings which have toppled regimes in Tunisia and Egypt.

Protests have also erupted in Jordan, Yemen, Iran and Libya, led by people clamouring for change.

But while political tension heats up, Singapore companies with offices or businesses in the region are not panicking.

Most of the 20 Singapore companies based in the region that The Straits Times spoke to say they are closely monitoring events and are in contact with the Ministry of Foreign Affairs there.

Singapore has been a keen investor in the Middle East in recent years and hundreds of local firms do business there.

The region is of growing importance to Singapore's trade and investments, with the Government and trade associations promoting linkages between Singapore and the region in recent years.

Last year, total trade with Bahrain, the United Arab Emirates, Saudi Arabia, Kuwait and Iran stood at $38 billion. This is about a third of the total trade value between Singapore and Malaysia, one of the Republic's main trading partners.

It is not known how many Singapore firms operate in the region. Among the larger firms are CapitaLand, DP Architects and Banyan Tree Hotels & Resorts. Many of these firms have offices in centres which are regarded as safer - such as Qatar, Dubai and Saudi Arabia - and which have not been affected by the unrest so far.

But even those which have a presence in the hot spots are not packing up to return to Singapore just yet.

Information Technology company NCS, which has an office in Bahrain, said it had told staff to avoid demonstration hot spots.

'If necessary, we will redeploy staff to other locations in the Gulf Cooperation Council states where NCS has offices and ongoing projects,' said its spokesman, adding that staff morale is normal.

The Ascott said it operates one serviced residence in Bahrain's Somerset Al Fateh through a management contract.

'The area around our serviced residence is calm. Our property is safe and business has not been affected,' said a spokesman.

'Nonetheless, we have heightened security measures at the property and will continue to monitor the situation closely and provide safety advice to our residents in consultation with the relevant government authorities.'

Overseas Port Management's managing director M.M.J. Subramaniam said his firm has small offices in Dubai, Sudan and Libya.

'So far, it's been okay. But we are prepared to evacuate people in Libya to our Dubai office if things get ugly. We were in Yemen doing a project but we finished that a long time before the trouble started. Thank goodness for that,' he said.

aaronl@sph.com.sg

somebody got caught slacking at the golf course... ;>

thought it would be obvious that nobody will be packing up, considering the sunk costs incurred it should take more disturbances before any such considerations...

Looks like things are more serious than I thought... The Bahrain International Investment Park is about 6 - 10 km away from the capital at best.

http://maps.google.com/maps?f=q&source=s...22988&z=13

Opposition Rejects Dialogue With Royals
Protesters return to square in Bahrain capital
By HADEEL AL-SHALCHI and BARBARA SURK Associated Press © 2011 The Associated Press
Feb. 19, 2011, 8:17AM

MANAMA, Bahrain — Thousands of singing and dancing protesters streamed back into Manama's central Pearl Square Saturday after Bahrain's leaders withdrew tanks and riot police following two straight days of a bloody crackdown by security forces in the tiny monarchy.

The royal family, which was quick to use force earlier this week against demonstrators in the landmark square that has been the heart of the anti-government demonstrations, appeared to back away from further confrontation following international pressure from the West.

The demonstrators had emulated successful uprisings in Tunisia and Egypt in attempting to bring political change to Bahrain, home to the U.S. Navy's 5th Fleet — the centerpiece of Washington's efforts to confront Iranian military influence in the region.

Crown Prince Salman bin Hamad Al Khalifa, deputy supreme commander of the armed forces, appealed for calm and political dialogue in a brief address on state TV.
People circling through the square clapped, whistled and wept. Some wore white sheets symbolizing their readiness for martyrdom, while others carried Bahraini flags, flowers and signs that said "Peaceful."

"We are victorious!" they chanted as they marched back into the square that has been the headquarters for their revolt against the Sunni monarchy in the predominantly Shiite island nation.

They also chanted: "The people want the removal of the regime."

President Barack Obama discussed the situation with King Hamad bin Isa Al Khalifa, asking him to hold those responsible for the violence accountable. He said in a statement that Bahrain must respect the "universal rights" of its people and embrace "meaningful reform."

British Foreign Secretary William Hague also expressed his concern about "clearly unacceptable and horrifying" violence against demonstrators in Bahrain. He urged Bahraini authorities to hold accountable those responsible for the deaths in protests there and to halt the intimidation of journalists.

The crown prince has been delegated by the royal family to open a dialogue with the opposition.

"The sooner we return to calm, the sooner we can reach our goals," Salman said. "Citizens of Bahrain, let's work together with all political blocks to help return the security situation to normal so we can announce a day of mourning for those we've lost."

The violence has already forced the cancellation of a lower-tier auto race in Bahrain that had been scheduled for this weekend. Formula One officials also are weighing whether to cancel the season-opening event in Bahrain on March 13 — a move that would be a huge blow to the nation's prestige.

Ibrahim Sharif, head of the opposition Waad Society, said that pulling the armed forces off the streets of Manama was not enough and demanded guarantees that protesters can stage rallies without fear of being attacked. Waad is an umbrella group of protest factions.

Some of the protesters were wary of Bahrain's leaders, despite the military withdrawal.

"Of course we don't trust them," said Ahmed al-Shaikh, a 23-year-old civil servant. "They will probably attack more and more, but we have no fear now."

He questioned what kind of dialogue could proceed after the crackdown.

"How can we have trust? Now there is one demand: We want the whole government to step down," he added
.
Hassan Youssef, 33, called the crown prince's speech "hypocritical and self-serving."

"He is afraid for his Formula One contract and thinks by just telling us to calm down we will listen," Youssef said. "We want the entire royal family to step aside. We don't want to dialogue. They will most definitely attack us again, but let them — we are ready for our blood to spill again."

Throngs of anti-government protesters took over the square earlier in the week, setting up a camp with tents and placards, but they were driven out by riot police in a deadly assault Thursday that killed five people and injured more than 200. The government then clamped down on Manama by sending the tanks and other armored vehicles into the streets around the square, putting up barbed wire and establishing checkpoints to deter gatherings.

On Friday, army units opened fire on marchers streaming toward the square. More than 50 people were injured in the second consecutive day of clashes.
Protesters who tried to march to the square Friday described a chaotic scene of tear gas clouds, bullets coming from many directions and people slipping in pools of blood as they sought cover. Some claimed the gunfire came from either helicopters or sniper nests.

The clash came hours after funeral mourners and worshippers at Friday prayers called for the toppling of the Western-allied monarchy. Some members of Bahrain's Sunni ruling system worry that Shiite powerhouse Iran could use Bahrain's majority Shiites as a further foothold in the region.

The cries against the king and his inner circle — at a main Shiite mosque and at burials for those killed when security forces attacked a protest camp in Pearl Square — reflected a sharp escalation of the political uprising, which began with calls to weaken the Sunni monarchy's power and address claims of discrimination against the Shiite majority.

The mood, however, has turned toward defiance of the entire ruling system after the crackdown, which put the nation under emergency-style footing with military forces in key areas and checkpoints on main roads.

On Saturday morning, jubilant Bahrainis honked car horns, waved flags and flashed v-for-victory signs as the tanks moved away from the square. An Associated Press photographer saw a contingent of riot police who replaced the military forces fire tear gas at people celebrating the military withdrawal from the square and detain at least 10 people.

But the riot police then left their positions, got into vehicles and drove away to allow the thousands of cheering protesters to return to the square. The crown prince had said the police would maintain law and order on the streets after the military withdrawal.

It was not immediately clear if the tanks and other armored vehicles moved all the way back to military bases.

Interesting that MTQ has barely budged since the trouble started in Bahrain. I was hoping for a catalyst to move the price up, but a buying opportunity is fine too.

How much effort has MTQ put into the country anyway? Last I remembered, it was something small but there was an intention to grow it.

This morning, MTQ has announced that Blossomdale Investments (a 100% subsidiary of MTQ) will subscribe for 200 million shares in Neptune Marine Services Limited, a company dealing with subsea services and listed on the Australian Exchange (ASX: code is NMS).

The shares were offered at A$0.05 per share, and is part of a restructuring plan by NMS to strengthen its Balance Sheet and raise funds. MTQ will thus pay an aggregate total of A$10 million (about S$12.93 million) and end up owning 12% of NMS after the exercise (Total issued share cap = 1.667 billion shares). This amount was paid for in full in cash using the internal cash resources of MTQ.

The rationale for this investment is that MTQ views synergy between NMS's business and wants to participate as a strategic investor. NMS's business is complementary in nature and will offer MTQ better exposure in Australia and the United Kingdom.

As at Sep 30, 2010, MTQ's total cash balance stood at about S$20.6 million. Assuming they are paying for this fully in cash, it will take up more than 50% of their cash resources and leave the company with about S$7.6 million in cash. Since MTQ's last financial update in terms of Balance Sheet was nearly 5 months ago, perhaps this is not a very accurate measure of its Balance Sheet strength and cash flow generation capabilities.

If we further assume (rightfully) that a significant amount was spent on capex for the new facility (no doubt funded by bank loans) and machinery and equipment for the new workshop, I am beginning to wonder if MTQ may have over-extended itself in terms of cash management. The CEO Mr. Kuah Boon Wee himself did mention in an interview in The Edge Singapore that start-up losses were very likely at Bahrain, and with the unrest it may also adversely affect operations.

These are just my legitimate concerns as a shareholder. The Company will release its FY 2011 results in early May 2011.

The acquisition of a 12% interest (comprising 200.0m new shares @AUD0.05/share) in ASX-listed and Perth-based Neptune Marine Services Ltd (NMS) for AUD10.0m (equivalent: $12.93m) in a swoop, by supporting - or more like taking advantage of - a major new capital raising by NMS, shows how shrewd and gutsy KK Kuah and his son are as investors.

My view is that MTQ has bought a nice stake at a great price in a decent - and potentially synergistic - business currently undergoing restructuring. We shall know from 10Mar11 - the scheduled date for NMS to recommence trading on ASX - onwards how well this new investment will do for MTQ. By simple math, every AUD0.01 gain over the AUD0.05 acquisition cost for each of the 200.0m NWS shares will bring MTQ a potential gain of AUD2.0m (approx. $2.586m) - translating to $0.0268/share, based on the latest 96.512m outstanding issued shares.

Would Mr Market reward MTQ in its share price, for KK Kuah's investment skills and the potential gain from this investment in NWS?