PEC

[specuvestor]

I would also like to know if PEC or anyone else listed is involved in the LNG terminal projects? Thanks

[mrEngineer]

I can't remember which edge magazine but I drew e conclusion from it that none of e 3 are involved. Rotary mentioned they are keen on exploring though. So it's still very rudimentary stage

[Shrivathsa]

I am just adding this note to consolidate the past analysis done by various sources on PEC.

A technical trade was advocated in Sep 2012

http://www.andy-yew.com/2012/09/singapor...t-pec.html

I guess this did not work out much

http://singaporestockmarketnews.blogspot...shing.html

Bottom fishing was advocated and did not seem to pan out.

http://singaporestockmarketnews.blogspot...group.html

A technical rebound was expected, did not pan out.

A very balanced view on next insight

http://www.nextinsight.net/index.php/sto...tay-vested

The dividend has been cut to 2 cents.

It goes ex dividend shortly.

My guess is that the stock will dive ex dividend to sub 50 cents levels.

I have not done any further analysis, but i think it might be an interesting buy at around 40 cent levels

[BlueKelah]

Other than the dividend cut, nothing much has happened to share price, it is still trading at lows and there is lack of interest in this share.

As per my valuation ratios today
Yield 3.85%
Net cash 57.34% to Mcap
MOS 38% to NAV
Making money, though possibly less going forward.
P/E 14.44

Will have to look into the AR for the % of major shareholders but when I got more time.

However even at 50c+ the yield is now less than 4% and won't know when this stock will have catalyst to make it boom.

Still on my radar until management becomes more generous with dividends, no point having a mountain of cash and not giving it out, especially when capex is not expected to increase in the near term.

[FatBoi]

I am just adding this note to consolidate the past analysis done by various sources on PEC.

A technical trade was advocated in Sep 2012

http://www.andy-yew.com/2012/09/singapor...t-pec.html

I guess this did not work out much

http://singaporestockmarketnews.blogspot...shing.html

Bottom fishing was advocated and did not seem to pan out.

http://singaporestockmarketnews.blogspot...group.html

A technical rebound was expected, did not pan out.

A very balanced view on next insight

http://www.nextinsight.net/index.php/sto...tay-vested

The dividend has been cut to 2 cents.

It goes ex dividend shortly.

My guess is that the stock will dive ex dividend to sub 50 cents levels.

I have not done any further analysis, but i think it might be an interesting buy at around 40 cent levels

Hi Shrivathsa, thanks for including my article (republished with permission on NextInsight) as one of the analyses done on PEC. I relooked at it and cringed at its quality.

All things equal, I agree with you that PEC share price can drop under 50 cents ex-dividend.

At last close of 52 cents, PEC is trading at P/E 14 times (52 / 3.6 EPS), 38% discount off NAV (52/83.9 NAV). The company is profitable but NPAT margins have been low single-digit (2+%). Balance sheet is expanding (as shown below) even after taking into account dividends paid out.

Retained earnings:
2010 - 123.8 mil
2011 - 145.8 mil (+17.8%)
2012 - 149.6 mil (+2.6%)
2013 - 155.5 mil (+3.9%)
2014 - 158.2 mil (+1.7%)

I am not an expert in this industry and PEC's underlying businesses but I believe besides the broad stock fundamentals to guide our assessment of whether PEC's share price is cheap or not, it pays to keep notes of what mgmt articulates as their intended strategies and follow through their execution. Then revisit the financial impact of those strategies. Otherwise mgmt can say all the nice fluffy things all they want, it does not translate to increase in bottom line - which is important whether you are looking for dividends or capital gain (or both).

Prospects and actions (from 2014 annual report):
- Expect energy demand to grow in mid-long term (targeting new clients in adjacent industries i.e. energy-related and upstream O&G + wider geographies i.e. Middle East and emerging economies)
- Deepen capabilities (Upgrade of facilities and service network globally; investing in new fab yard in Myanmar - "near customer, near market" strategy; new milestones in hydro-desulphurisation unit which may pave way for more such projects + upcoming development of crude oil storage and handling facilities, including construction of 5 mega tanks)
- new contracts to come on stream from mid-2015 (project works)
- more plant shutdowns and turnarounds in FY2015 1H (maintenance)

Challenges (actions to address)
- Rising costs (review cost and op. structure - streamlining efforts + consolidate key ops. into Benoi Lane including workers' dorms)
- Intense pricing pressures (exploring ways to incorporate modular fabrication approach on larger scale to expedite proj. execution)

My other side observations of the AR:
- other op. income is quite substantial ($7.1 mil or 71% of bottom line)
> usually not recurring but for PEC's case some are: rental income, training income, income from sale of scrap material, and govt grants and incentives* till expiry?)
> a significant ($1.7 mil) writeback of impairment allowance of trade receivables is, despite non-recurring, a good indicator of mgmt prudence in first impairing the receivables and then good collection ability to recover those amounts.
- current year impairment $1.6 mil of contract-in-progress + $2.8 mil of trade receivables (hope this is one time and maybe even write back upon collection next financial year)

[Shrivathsa]

I am just adding this note to consolidate the past analysis done by various sources on PEC.

A technical trade was advocated in Sep 2012

http://www.andy-yew.com/2012/09/singapor...t-pec.html

I guess this did not work out much

http://singaporestockmarketnews.blogspot...shing.html

Bottom fishing was advocated and did not seem to pan out.

http://singaporestockmarketnews.blogspot...group.html

A technical rebound was expected, did not pan out.

A very balanced view on next insight

http://www.nextinsight.net/index.php/sto...tay-vested

The dividend has been cut to 2 cents.

It goes ex dividend shortly.

My guess is that the stock will dive ex dividend to sub 50 cents levels.

I have not done any further analysis, but i think it might be an interesting buy at around 40 cent levels

Hi Shrivathsa, thanks for including my article (republished with permission on NextInsight) as one of the analyses done on PEC. I relooked at it and cringed at its quality.

All things equal, I agree with you that PEC share price can drop under 50 cents ex-dividend.

At last close of 52 cents, PEC is trading at P/E 14 times (52 / 3.6 EPS), 38% discount off NAV (52/83.9 NAV). The company is profitable but NPAT margins have been low single-digit (2+%). Balance sheet is expanding (as shown below) even after taking into account dividends paid out.

Retained earnings:
2010 - 123.8 mil
2011 - 145.8 mil (+17.8%)
2012 - 149.6 mil (+2.6%)
2013 - 155.5 mil (+3.9%)
2014 - 158.2 mil (+1.7%)

I am not an expert in this industry and PEC's underlying businesses but I believe besides the broad stock fundamentals to guide our assessment of whether PEC's share price is cheap or not, it pays to keep notes of what mgmt articulates as their intended strategies and follow through their execution. Then revisit the financial impact of those strategies. Otherwise mgmt can say all the nice fluffy things all they want, it does not translate to increase in bottom line - which is important whether you are looking for dividends or capital gain (or both).

Prospects and actions (from 2014 annual report):
- Expect energy demand to grow in mid-long term (targeting new clients in adjacent industries i.e. energy-related and upstream O&G + wider geographies i.e. Middle East and emerging economies)
- Deepen capabilities (Upgrade of facilities and service network globally; investing in new fab yard in Myanmar - "near customer, near market" strategy; new milestones in hydro-desulphurisation unit which may pave way for more such projects + upcoming development of crude oil storage and handling facilities, including construction of 5 mega tanks)
- new contracts to come on stream from mid-2015 (project works)
- more plant shutdowns and turnarounds in FY2015 1H (maintenance)

Challenges (actions to address)
- Rising costs (review cost and op. structure - streamlining efforts + consolidate key ops. into Benoi Lane including workers' dorms)
- Intense pricing pressures (exploring ways to incorporate modular fabrication approach on larger scale to expedite proj. execution)

My other side observations of the AR:
- other op. income is quite substantial ($7.1 mil or 71% of bottom line)
> usually not recurring but for PEC's case some are: rental income, training income, income from sale of scrap material, and govt grants and incentives* till expiry?)
> a significant ($1.7 mil) writeback of impairment allowance of trade receivables is, despite non-recurring, a good indicator of mgmt prudence in first impairing the receivables and then good collection ability to recover those amounts.
- current year impairment $1.6 mil of contract-in-progress + $2.8 mil of trade receivables (hope this is one time and maybe even write back upon collection next financial year)

Hi FatBoi,

Yes, in hindsight, one wishes one writes more lucidly and clearly and looking back at a post which was two years ago, it is normal to cringe.

Having said that, based on the information available, your analysis was quite good.

Cheers

[GiraffeValue]

trading at 48%below book now.
mkt cap 113m
cash 82m
contract in progress 57m

Receivable 68m!
razor thin margin of 1-2%!

Seem to be outright undervalue but what are the chances the receivable gone bad

[BlueKelah]

Their main clients are major refinery companies so unlikely receivables not collected just maybe delayed. As it is a small cap, having thin margins in a crashing oil price environment is not very good.

Div yield not attractive as well.

Would be a good buy when oil hits bottom and margins start picking up.

On radar too due to high net cash ;-)

-- via Xperia Z1 with tapatalk

[ngcheeki]

PEC is another undervalued/unappreciate company with a net cash of 27 cents, NTA of 84 cents or P/NAT of 0.54x and net current asset of 44 cents which is close to the last traded price of 44.5 cents. Q1FY2015 order book was S$185 mil and EPS of 0.8 cents.

SINGAPORE (Feb 4): PEC announced that it had won a $132 million contract for a refinery project in United Arab Emirates (UAE).

In its filing with Singapore Exchange today, PEC said its task is to undertake an extensive fast-track project that is scheduled to be completed by April 2016.

Under the contract, PEC will responsible in providing engineering, procurement and construction (EPC) works for the development of a number of crude and fuel oil tanks.

These tanks have a combined capacity of about 430,000 metre cube that serves a leading refinery in the UAE.

According to its filing, the project will include all related infrastructure needed to enable the PEC’s client existing refinery in enhancing its crude oil processing capacity as well as on-site and off-site works which will be carried out to integrate the new storage facility with the refinery’s current processing units.

“PEC was able to secure the contract for this project because of our proven track record for providing safe, reliable and timely delivery,” PEC’s group chief executive officer Robert Dompeling noted in a statement today.

“Having noted our expertise and experience in handling a similar project in the UAE, the client was keen to work with us to ensure successful completion of this major undertaking,” he explained.

The group expected to have a positive impact on its earnings for the financial year ending June 30, 2015.

“Winning this contract will further boost our standing in the Middle East and advance our efforts to expand our customer base there,” Dompeling added.

PEC’s counter closed 1.5 cents or 3.49% higher at 44.5 cents, giving it a market capitalisation of $109.72 million.

http://www.theedgemarkets.com/sg/article...ry-project

[chew]

I believe the order book was 185 mio as of September 2014. With this new order, is it fair to say that order book looks modest given its historical revenue run rate.