Portek International

Based on the steady buying and rise of the share price since 10May11, it looks like Portek is poised to breach the $0.70 mark soon. Some serious buying in anticipation of good full-year (ending 30Jun11) results due in Aug11? Well, this is quite conceivable if Portek's strong H1 (ended 31Dec10)-FY11 results is any indication of better things - including perhaps also a higher Final dividend (last FY10: $0.02572/share) - to come.....
http://info.sgx.com/webcoranncatth.nsf/V...40016C7B6/$file/Portek-Masnet-FY1H2011.pdf?openelement [H1-FY11 results]
http://info.sgx.com/webcoranncatth.nsf/V...40016C7B6/$file/PORTEK-1H2011-Press-Release.pdf?openelement [Press release]

I am also quite happy to note that Portek's share price has done much better than the so-called blue-chip HPH Trust, which was offered at USD1.01 at IPO in Mar11, but has since traded mostly below that, with last done at only USD0.915.

Supported by follow-through buying this morning (18May11), Portek has now convincingly crossed the $0.70 mark and last done at $0.73. This is a good showing!

I was going through Portek's website this morning and thought the following Chairman's Message is very well written and gives a clear description of the company's 3 core businesses and where and how Chairman Larry Lam intends to grow them further....


Overview

Over the past few decades, world trade and consequently world container traffic had steadily increased each year, until the onset of the 2008-2009 global financial crisis. World container port throughput in 2009 suffered an unprecedented 8.6% drop, but has since recovered and is now expected to grow at 11% in 2010. Though future growth may stabilize at a lower level, particularly in the immediate years ahead, it will likely be a more sustainable one. This is because the emerging economies of Asia, Latin America, Africa, etc meanwhile are fast catching up and will help to contribute to a more balanced global demand, thus moving away from one which had been over-dependent on the OECD countries. People's desire for a better life, urbanisation and global manufacturing outsourcing will likely continue to drive growth in these emerging countries. The global logistics and supply chain, including the port sector, is a critical part of the world economic system. Portek as a player in this industry, has carved its own niche, and created its own unique value propositions over the past 2 decades and more.

Your Preferred Partner in Port Business

Since its establishment in 1988, Portek has always been guided by its motto "Knowledge and Solutions in Port Business". This has enabled us to build our business on a platform of seeking and applying knowledge to provide solutions for challenges in the port business worldwide. Our unique business proposition is the capability to provide the entire spectrum of competencies from Equipment Engineering, Port IT & Automation, to Port Operations and Management. As we are both a provider and an end-user, it allows us to look at issues from both angles. Our approach has always been, firstly, to understand the customers' "pains", then, advising them on the root cause, before finally providing holistic solutions that encompass technical, commercial and business considerations. This way, we forge long term partnerships with our customers. Being a medium-sized enterprise, we are flexible and responsive to customer demands which often come in as urgent requests. Such requests may be the salvage, recovery and repairs in a crane accident, additional crane capacity to handle sudden additional ship calls, or fast track modernization and start up of the entire terminal.

In the following, we wish to briefly introduce you to our three business segments:

Port Equipment Engineering

This has been the business that Portek started with, in the first place, in 1988. Port Equipment Engineering comprises the following:

•Sale and leasing of Port Equipment
•Equipment Modernisation, Modification, Mobilisation, and Maintenance
•Technical services including Consultancy, Survey, Inspection, Accident Recovery and Repairs.
Since its inception, Portek has modernized or modified 350 cranes (quay cranes and RTGs) and relocated 250 cranes. Our expertise has benefited our customers in terms of extending equipment life with increased safety and reliability, increased crane reach and height to handle Post-Panamax sized ships, quick delivery of cranes to cope with traffic surge from shipping lines. Our client list includes major hub ports handling tens of millions of TEUs, to fledgling ports of only a few thousand TEUs. We had carried out challenging projects throughout the world, from Alaska to Algeria, from Havana (Cuba) to Hodeida (Yemen). Portek engineers and technicians have distinguished themselves, time and again, with their professionalism and dedication to their job. Satisfied customers and repeat business is testimony to that.

Port IT and Automation

Port IT and automation is increasingly becoming the key driver for terminal productivity, while integrating the port and its users into a seamless system, with instant real time updating. Our suite of offerings includes:

•Container Terminal Management (software) Systems
•Terminal planning and simulation software
•Various automation modules aimed at productivity enhancement such as Position Determination System, Optical Character Recognition for gate automation, Radio Data System, Truck Alignment System, etc.

Terminal Operation and Management

Having built up an entire spectrum of port competencies, and successfully carried out operating leases of cranes with numerous ports, it became a natural extension for us to enter into terminal concession agreements to operate terminals. We commenced our terminal operation business in 1998, with terminals in Indonesia. This has now expanded into a network of 7 terminals in Indonesia, Algeria, Gabon, and Malta, with likely more to be added in the future.


For the terminal operation business, Portek is specifically focused on regional and feeder ports primarily located in emerging countries. We feel that our competencies, and our size make us particularly suited to engaging with these emerging ports, helping them to modernize their infrastructure and equipment and IT systems, and to enlarge their hinterland to attract more cargo. We believe that feeder ports are vital to the proper functioning of the entire hub and spoke pattern of container shipping, at the same time as they are also gateways to the respective regions they are located in. Portek's advocacy for regional and feeder port development is demonstrated in the numerous papers authored by Portek in international journals, or presented at port conferences. See "Portek Publications" in this web site.

Conclusion

With the above three core business segments, we are firmly anchored in the global port business, serving port customers large and small, across the seven continents. We believe that though there are trade and currency exchange issues between major trading nations, world trade is more likely to expand further, as the case for it is so compelling, and the contrary is simply not an option. We are therefore optimistic of the potentials that this industry holds for its participants. Portek will continue, in its own ways, to advance the knowledge frontiers of the port business, to set new benchmarks in service standards, and to strive to be a centre of excellence in port learning and practical problem solving.

Larry Lam
Chairman
Portek International Limited

The valuation at $0.73 doesn't look excessive to me. The business is growing and has earned 8.6ct per share last year and 4.9ct in 1H11. Dividend policy is in place. Owner-manager Larry Lam is working hard. More projects are in the pipeline. Recurring revenue should go up. Further diversification should reduce (perceived) risks. Pump it up.

It is still pretty attractive if one seeks exposure to emerging market port infrastructure assets. I would rather purchase Portek than HPHT based on current market prices. The dividends are historically attractive as well.

(Not Vested)

Larry Lam is not know for blowing trumpet, and his remarks as reported in the Edge ( 28 Mar 2011) should be examined carefully:
(1) Para 4 -- "Portek has a 20-year concession with the Algerian Port Authority to jointly operate the terminal, which last year handled up to 160,000 TEUs ............ This year, Lam expects to raise the throughput at BMT by 15%."
(2) Para 8 -- "Lam is also in the process of gaining approval to commence dredging at one of its shallow water terminal at the Tanjong Priok Seaport in order to accommodate the increasing number of larger ships calling at the port."
(3) Para 9 -- "Portek's multi-purpose terminal at Banten, Java, caters to bulk commodities ........, which are seeing rising demand ....."
(4) Para 11 -- "Lam is expecting top and bottom lines to improve in the coming months as container volumes grow. "Terminal charges usually go up by 10% to 15% a year, and throughput usually grows at twice the rate GDP." he says."

Rising throughput and terminal charges should bring in better profit, notwithstanding the effect of a strong Sing $. To better appreciate the effects, please refer to my post dated 29 Mar 2011.

The Edge article also refers to the obstacles faced by land-locked countries in developing their trade and industry owing to high costs of freight and long delays in getting their goods in and out.
Now we have Portek taking a 60% stake in MGR in Rwanda, to bring about a higher efficiency in the overall transportation system thereby reducing the cost and time duration of import and export for land-locked Rwanda.

Portek has just issued an announcement on a positive business outlook and a $44.0m total order backlog in its Port Engineering business segment.....
http://info.sgx.com/webcoranncatth.nsf/V...500214BDD/$file/Portek-Announcement-Portek-Engineering-Business-enjoys-healthy-orderbook-19-05-2011.pdf?openelement

(19-05-2011, 06:00 PM)dydx Wrote: Portek has just issued an announcement on a positive business outlook and a $44.0m total order backlog in its Port Engineering business segment.....
http://info.sgx.com/webcoranncatth.nsf/V...500214BDD/$file/Portek-Announcement-Portek-Engineering-Business-enjoys-healthy-orderbook-19-05-2011.pdf?openelement

This segment of Portek is beginning to show its worth. Its revenue was $24.8m for the six months ended 31 Dec 2010; with a high gpm of 41%.
Earlier, this segment did not fare well, prompting clamours to sell it off. Such view fails to take account of the fact that Portek's own terminals are efficient partly because of this in-house engineering arm which provides prompt service to the terminals. The less than stellar performance then was also the result of Portek having to incur high costs when it undretook jobs in new markets

I am indeed heartened by the strength of Portek's share price today, as the whole SGX market has softened, and so far (15:50 hours) the STI is already down by close to 2%. This is indicative of Portek having a rather solid shareholders base and has attracted strong interests from some new investors, and perhaps something positive is quite imminent.

Congrats! Cash offer at $1.20.

(01-06-2011, 09:39 AM)cif5000 Wrote: Congrats! Cash offer at $1.20.

Wow congrats dydx! I think this will buy many many good meals.

Sigh, another one which I missed. Oh well, back to the drawing board. I think I have to refine the way I evaluate companies. Always seem to keep missing the ones with fabulous GOs.....