AP Oil

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AP Oil QA AGM 2021

Question 1: Can Management consider to distribute all the earnings instead of holding excessive cash levels ($35.7milion)? 

Answer: The Group cash and cash equivalents of $35.7 million is required for working capital and capital expenditure requirements of the Group, and for merger and acquisition projects as determined and undertaken by the Company to enhance shareholder value and seek out new business growth. The quantum of dividend declared each year will take into consideration the Group’s profit growth, projected capital requirements for business growth and other factors as the Board may deem appropriate. The Board has proposed a final tax-exempt dividend of 0.50 cent per ordinary share for financial year 2020, this to be approved at the Annual General Meeting on 28 April 2021. 

Question 2: What solution can Management look at to boost the low capitalization? 

Answer: Management will continue to seek out new business opportunities and strengthen our existing business, amidst the Covid-19 pandemic, to bolster better performance and enhance shareholder value. The market will find its own level for the share price. Management will continue to focus on delivering better earnings for the Company. 

Question 3: What is the revenue share between the Lubricants and Specialty Chemicals? What are their respective margins? 

Answer: Manufacturing segment accounted for 59.0% or $33.7 million of the Group’s revenue, it is split into 2 products, namely: 
• Lubricants, carried out by AP Oil Pte Ltd; and 
• Specialty Chemicals, carried out by A.I.M. Chemicals and GB Chemicals. 

In financial year 2020, the revenue share between the Lubricants and Specialty Chemicals was 76% and 24% respectively. The revenue share is dependent on volume and selling price, and may fluctuate from time to time. Manufacturing segment gross margin was 19.8%. As the Specialty Chemicals revenue relate to small, competitive and niche markets, it is not in the Group’s interest to disclose the respective margins. 

Question 4: What is the Company’s plan with reduction of cars use of lubricants in near future? 

Answer: As part of its strategic review earlier, the Company had anticipated the advent of electric vehicles to potentially disrupt the use of lubricants in the middle term. To diversify its revenue base, the Company embarked to develop the new Marine market segment; and to secure toll blending customers for business growth and diversification of the Group’s revenue. Thereafter, the Company acquired three Marine segment customers and two toll blending customers. The Company will continue to seek out new business opportunities to grow its revenue base.



Pretty standard boilerplate statements.

They have been going on about M&A since the oil price crash in 2015 but the only significant investment they made was their renewing their plant lease and refurbishing its PPE. They have made good investments in the past, but I'm not sure what to make of junior's investment ability. The good thing is they have finally changed their long time audit-type IDs to those with PE & M&A skillsets. So quite possibly, some corporate or M&A action can be expected.

Shipping looks to be on an upturn after many years of stagnation. If this sustains, APO may have better marine lubricant business in the coming years. But much depends on the world's ability to contain the pandemic from disrupting the nascent economic recovery. The closure of Hin Leong's lubricant plant would have been a boon but it was acquired by Gulf Oil, so the competition is still there.

Thanks Valuebuddies Karlmax.

Yes, I noticed that APO had been talking about M&A and was waiting patiently for their M&A announcement. 

With the recent addition of 2 new Independent Directors, I was very pleased to see that something is moving.

Mr Mah
Mr Wan

One could remains a bit patient for the result to kick in or like me, pull the trigger law.

The trigger point is almost there... corporate action? M&A? 
Not sure and don't care.

I noticed that APO price had been taking a hit few months ago and decided to start accumulating... and my accumulation is still going on because the price is rather good...erh reasonable to me.

For my trading record, I brought between 15.0 to 18.1 cents (last week).
Would be buying more (especially if the price drop further).

Worst case, I would had gotten dividend of 3 - 5% every year.
Which to me is not a bad place to park my $$$ during Covid-19 pandemic.

(This is very similiar to parking excess cash in SpShip. The different is SpShip is getting better and better every Qtr aka extremely consistent return/result, whereas APO is having competitions knocking upside-down, left-right-center... very challenging and difficult business to run.  I pity Jr. Mr Ho.  Fighting... Keep it up!)

I am very grateful for all the help given by everyone.
Even you did not know, you had been helping me a lot.

Wish me luck and stay safe, everyone:


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