XMH Holdings

[greengiraffe]

PUBLISHED APRIL 23, 2014
XMH eyes acquisitions, seeks growth in Vietnam

BYMALMINDERJIT SINGH
msingh@sph.com.sg @MalminderjitBT

Mr Tan: Cites XMH's purchase of MPG and its M'sian unit as an example of a good acquisition
XMH Holdings is hoping to expand through acquisitions and grow its footprint in Vietnam.
The Singapore-listed provider of diesel engine, propulsion and power-generating solutions told The Business Times that it aimed to use its balance sheet to make acquisitions, which will generate positive cash flow and profits for the group.
"(Basically) acquisitions will add to our top and bottom lines," CEO and chairman Elvin Tan said in a recent interview.
He added that the target companies will not only be in related businesses or industries such as marine, engineering and power generation, but should also be good operating companies.
He cited XMH's purchase of Singapore-based Mech Power Generator (MPG) and its wholly owned Malaysian subsidiary, which assemble high-end generators, for about $17.4 million last year as an example of a good acquisition.
The deal, which was the company's first diversification into the non-marine sector, seems to have paid off. MPG contributed as much as $15.1 million to the firm's 71.4 per cent jump in revenue to $33.1 million for the third quarter ended Jan 31, 2014.
Mr Tan noted that since XMH built generators for the marine industry, there were synergies in acquiring MPG. "Having Mech Power in the group opens up the generator sets business in a big way for us. Since its main market is Singapore, the Mech Power business has allowed us to diversify our revenue base and balances our exposure to Indonesia," he explained.
Apart from acquisitions, XMH wants to expand to Vietnam, which it views as a priority market. The group recently announced contracts worth about $4.5 million, which allowed it to secure a foothold in Vietnam.
"Vietnam is going to be important to us going forward as we are going to spend more time and resources in that market," Mr Tan revealed.
XMH expects to open its new facility in Tuas in the second half of 2015. The plant, which has a built-up area of about 40,000 square metres, will help boost the company's capacity for assembly work.
XMH plans to leverage on the new facility to develop a logistics services business line, including warehousing.
Earlier this month, XMH said that its subsidiary, Xin Ming Hua Pte Ltd, was ordered by the Singapore High Court to pay $3.47 million in damages to Pacific Marine & Shipbuilding for supplying it with defective parts.

[CityFarmer]

The company announcement on the same article below.

http://infopub.sgx.com/FileOpen/BT_Artic...eID=292638

PUBLISHED APRIL 23, 2014
XMH eyes acquisitions, seeks growth in Vietnam

BYMALMINDERJIT SINGH
msingh@sph.com.sg @MalminderjitBT

Mr Tan: Cites XMH's purchase of MPG and its M'sian unit as an example of a good acquisition
XMH Holdings is hoping to expand through acquisitions and grow its footprint in Vietnam.
The Singapore-listed provider of diesel engine, propulsion and power-generating solutions told The Business Times that it aimed to use its balance sheet to make acquisitions, which will generate positive cash flow and profits for the group.
"(Basically) acquisitions will add to our top and bottom lines," CEO and chairman Elvin Tan said in a recent interview.
He added that the target companies will not only be in related businesses or industries such as marine, engineering and power generation, but should also be good operating companies.
He cited XMH's purchase of Singapore-based Mech Power Generator (MPG) and its wholly owned Malaysian subsidiary, which assemble high-end generators, for about $17.4 million last year as an example of a good acquisition.
The deal, which was the company's first diversification into the non-marine sector, seems to have paid off. MPG contributed as much as $15.1 million to the firm's 71.4 per cent jump in revenue to $33.1 million for the third quarter ended Jan 31, 2014.
Mr Tan noted that since XMH built generators for the marine industry, there were synergies in acquiring MPG. "Having Mech Power in the group opens up the generator sets business in a big way for us. Since its main market is Singapore, the Mech Power business has allowed us to diversify our revenue base and balances our exposure to Indonesia," he explained.
Apart from acquisitions, XMH wants to expand to Vietnam, which it views as a priority market. The group recently announced contracts worth about $4.5 million, which allowed it to secure a foothold in Vietnam.
"Vietnam is going to be important to us going forward as we are going to spend more time and resources in that market," Mr Tan revealed.
XMH expects to open its new facility in Tuas in the second half of 2015. The plant, which has a built-up area of about 40,000 square metres, will help boost the company's capacity for assembly work.
XMH plans to leverage on the new facility to develop a logistics services business line, including warehousing.
Earlier this month, XMH said that its subsidiary, Xin Ming Hua Pte Ltd, was ordered by the Singapore High Court to pay $3.47 million in damages to Pacific Marine & Shipbuilding for supplying it with defective parts.

[mkmk]

http://infopub.sgx.com/FileOpen/XMH_Ann_...eID=294278

The Board of Directors (the “Board”) of XMH Holdings Ltd (the “Company”) refers to its announcements dated 23 March 2012 and 3 April 2014 in relation to the legal proceeding and court judgment against its wholly-owned subsidiary, Xin Ming Hua Pte Ltd (the “Xin Ming Hua”).

Further thereto, the Board wishes to update shareholders that Xin Ming Hua intend to appeal against the aforesaid judgment of the High Court, and has accordingly filed the requisite Notice of Appeal to the Court of Appeal on 28 April 2014.

(Not vested)

[GreedandFear]

For those interested in this company, you may want to take a look at Marco Polo's first half results. Gross profit margin plunged from 40% to 28% and this was ascribed mainly to lower utilisation of the companies barges and tugs. The barges are primarily used for coal transportation in Indonesia. There seems to be continued weakness in the Indonesian coal sector and this should continue to negatively impact XMH's sale of ship engines to Indonesia.

(Not vested in XMH but vested in Marco Polo)

[CityFarmer]

The first contract win after the MPG was integrated into XMH...

(not vested)

XMH’s subsidiary, MPG Group, secures multiple contracts worth a total of S$10.57 million
 First major contract wins since the incorporation of the MPG Group into XMH
 Five contracts from a diverse range of local and regional customers secured from April to June
 Contracts to provide flow of activities through to January 2016

http://infopub.sgx.com/FileOpen/XMH_Pres...eID=302537

[sykn]

For those interested in this company, you may want to take a look at Marco Polo's first half results. Gross profit margin plunged from 40% to 28% and this was ascribed mainly to lower utilisation of the companies barges and tugs. The barges are primarily used for coal transportation in Indonesia. There seems to be continued weakness in the Indonesian coal sector and this should continue to negatively impact XMH's sale of ship engines to Indonesia.

(Not vested in XMH but vested in Marco Polo)

Thanks for the heads-up. I did consider but did not go in, after they got involved in some legal problems.

[CityFarmer]

Lim and Tan Securities analyst report on the company, base on latest financial report.

(not vested)

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XMH Holdings Ltd ($0.30, unchanged) reported FY14 net profit of
$6.1 mln (-46.4% yoy) despite revenue growth of 7.7% to $105.2
mln, primarily due to better performance from the “projects”
business segment and its “after sales” business segment. This
was however, offset by the decrease in revenue of about S$25.7
mln from the group’s “distribution” business segment.
Gross profi t margin further widened by 2.5% points in FY14 to
26%, arising from the favourable change in sales mix attributed to
higher contribution from the higher margin products in the group’s
“distribution” and “after sales” business segments, as well as
positive contribution from the newly-acquired MPG Group.
As expected, the sharp fall in net profit was partly because of
a one-off provision of approximately S$5.1 min for costs and
professional fees in relation to an ongoing litigation case. In
addition, we note that operating expenses also increased, largely
due to (i) increase in infrastructure costs (including payroll costs
and other costs related to inclusion of the MPG Group) to support
its growth plans and increased business activities.
Despite the lacklustre results, the group has declared a total DPS
of 1.2 S cents for the FY14, comprising of 1.0 cent of final cash
dividend and 0.2 cent of special cash dividend. The dividend
amount equates to a dividend payout of about 85% and yield of
4%, based on last closing price.
Separately, XMH also updated that it has secured five new
contracts worth a total of S$10.57 mln from the start of April 2014
till date. These five contracts will provide the MPG Group with
a fl ow of activities through to Jan 2016 and marks its first major
contract wins since the consolidation into the XMH Group.
MPG Group’s first set of two contracts, for the provision of
Mitsubishi and MTU generator sets to the local data centre
industry, is worth a total of S$6.02 mln and will be fully delivered
by Aug 2014. Another three contracts for Mitsubishi generator sets
worth a total of S$4.55 mln, which consist of a large order from an
Indonesian customer is for a mixed residential and commercial
development as well as for an industrial development. These
contracts are scheduled to be fully delivered by Jan 2016.

http://remisiers.org/cms_images/research...625_LT.pdf

[mulyc]

There is a write-up on NextInsight today as well

http://www.nextinsight.net/index.php/sto...xmh-fy2014

[CityFarmer]

UOB KayHian's analyst report of the company. More detail on the newly acquired MPG...

(not vested)

---------
XMH HOLDINGS (XMH SP)
Takeaways From Plant Visit
VALUATION
 Excluding its net cash of S$21m and non-recurring provision of S$5.1m, XMH is
trading at an adjusted ex-cash FY14 PE of about 11x.
What’s new
 We recently visited the Malaysian factory of XMH’s subsidiary, MechPower (MPG).
This note highlights the key takeaways from the visit.
Investment Highlights
 With over 30 years in operation, MPG is a leading distributor of diesel-powered
generator sets used in the commercial sector, military, airports and hospitals as
standby generators to ensure business continuity in the event of a power blackout.
 Cost leader in a defensive niche market. MPG manufactures supporting
equipment like silencer and canopies at its plant in Iskandar Malaysia. As a result, it
is able to supply quality customised generator sets at competitive pricing, cementing
its leadership position in this fairly defensive niche market.
 Established track record with blue-chip clientele. As the market leader, MPG
boasts an impressive portfolio of clientele that includes Changi Airport Terminal 3,
NTU, NUS, SGX, NUH, Tan Tock Seng Hospital, and the data centres of Microsoft,
Barclays Banks and American Express.
 Positive outlook hints of buoyant demand. In recent months, MPG has seen an
increase in queries for its generator sets, especially from data centres. According to
Gartner, data centres’ investment in Asia is expected to grow 6.7% in 2014,
underpinned by the continued infrastructure build-up of internet data centres in the
region. Singapore’s data centre market is also expected to grow by 3% yoy in 2014.
MPG currently derives about 50% of its business from data centres.
Our View
 After correcting from a high of S$0.48, share price has stabilised near S$0.29, which
is very near to the entry level of XMH’s strategic investor, Credence. Credence
invested S$10m in XMH in May 13 at S$0.2774/share. Coupled with a dividend yield
of about 3.8%, we believe this could act as a near-term price support.
 MPG to support profit base of XMH. According to the terms of the acquisition,
MPG has provided a profit warranty to XMH, where MPG’s consolidated net profit for
both FY14 and FY15 shall not be less than S$6.9m. This should provide some
support to XMH’s bottom line, which was slightly dampened by the political
uncertainty in Indonesia.
 XMH’s distribution business was affected in FY14 due to a delay in placements of
orders and/or deferment of collection of deliveries, attributed to the political
uncertainties in Indonesia. When the political situation in Indonesia stabilises after
the elections, FY15 earnings may be boosted by the backlog of orders

http://remisiers.org/cms_images/research...KH_XMH.pdf

[CityFarmer]

The company new attempt on M&A, after the success on the MPG Group. The company is getting more and more interesting...

(not vested)

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XMH to further diversify with addition of switchboards
and marine automation products; signs S$13.2 million
MOU for the 80% stake in Z-Power Automation
• Group’s 2nd acquisition after successful completion of the MPG Group acquisition
in 2013
• Acquisition of Z-Power allows the Group to increase its presence in the offshore
industry and strengthen its regional operations
• Acquisition allows Group to add complementary suite of services to Group’s
current capabilities
http://infopub.sgx.com/FileOpen/XMH_Pres...eID=310743