AP Oil

[tanjeremy]

Hi there, any one has any additional information or know about any history on AP Oil? Can're really find any news on this company on the internet.

[kelvesy]

What sort of history? There are plenty of sources.

http://www.apoil.com.sg/content.aspx?uc=28 - annual reports provide excellent source of information.
http://sgx.com/wps/portal/sgxweb/home/co...ouncements - SGX.

[tanjeremy]

probably just anything about the company.. haha. It's alright, I think I will just read the annual reports of the company. Thanks yea!

[Salty]

I was looking at the company previously as it was trading near net cash.
And one of the year the management got into some trouble due to non disclosure.

Sinopec before setting up factory in singapore used them to help blend their oil using sinopec blend.
Basically using them to test market.

Now sinopec started their factory in Singapore.
This shows that big lube user only use big brands. Not entirely quality. Meaning its a commodity product.

However AP oil has their own niche segment of clients who value better lube.

Thats my observation.

[tanjeremy]

I was looking at the company previously as it was trading near net cash.
And one of the year the management got into some trouble due to non disclosure.

Sinopec before setting up factory in singapore used them to help blend their oil using sinopec blend.
Basically using them to test market.

Now sinopec started their factory in Singapore.
This shows that big lube user only use big brands. Not entirely quality. Meaning its a commodity product.

However AP oil has their own niche segment of clients who value better lube.

Thats my observation.

Hey Salty, thanks a lot many thanks! Very informative.

[Some-one]

Interestingly, the son of the CEO and Chairman is also the Deputy CEO and he has a law degree. I wonder how would a law degree helps the company since he is supposed to take over his father's role as CEO of the company.

[shn]

I have taken a closer look at AP Oil over the last two weeks. The valuation seems to be attractive. 1H13 EPS is 1.83 cents. Assuming the same amount of earning in 2H13, PER will be 5.7 based on last closing price of 21.0 cents. It has 10.4 cents of cash after deducting the financial liabilities. NAV is 24.01 cents. The book value for property, plant and equipment is only $3,936K (based on 1H13 half-yearly report) but it has the following leasehold properties:
No. 3 Gul Crescent: land area 5217 sq m; 30+30 years lease from 1 April 1981
No. 18 Pioneer Sector 1: land area 8,426 sq m; 30+10 years lease from 1 Feb 1979
No. 19 Tractor Road: 22 years 4 months lease + 22 years 10 months from 29 October 1985.

I believe the actual value of these leasehold properties is higher than its book value but I will ignore the difference.

Investment Merits:
• Attractive valuation with projected PER of 5.7, projected ex-cash PER of 2.9, P/B of 0.87. Cash level is 49.6% of its share price of 21.0 cents.
• The company has a few growth strategies, which include expansion of production capacity, licensing and franchising, and merger and acquisition.
• It has healthy gross profit of 20.7% and PBT margin of 9.6%
• Director Ho Chee Hon, son of AP Oil Chairman, bought 400 lots at 18.2 cents in May 2013.

Concerns
• Its 1H13 revenue dropped by 32% compared to 1H12 (though the net profit for 1H13 is on par with that of 1H12 due to higher gross margin).
• Dividend yield of 2.4% is low.

Its share price has been rising slowly. I have taken a small position and will review again when AP Oil releases its FY13 results, which is expected to be in February 14 -- its FY12 results were released on 19 February 2013).

I welcome other forumers to share their views on AP Oil.

[minimax]

Look, I have nothing against AP Oil, But there are better bargains to be had if one is willing to consider stocks listed on foreign exchanges.

Take for instance Petrochina(HK: 0857). This is a blue chip large cap stock that is only trading at a forward PE of 7 and paying a 5% dividend to boot. It also registered sales growth of 16% YoY, 22% growth in profit YoY in Q3.

[shn]

Thank you for the information. I will take a closer look when I have the time. I focus mainly on small caps and mid caps because they are not well researched and not well known. There are more than enough under-valued small- and mid-caps in SGX to keep me occupied. I prefer stocks that have operations in Singapore so that I could use the scuttlebutt approach to find out information not in the public domain.

[minimax]

For those looking for stocks with even cheaper valuations than Petrochina, they might want to take a look at CNOOC (HK:883).

CNOOC is a large cap oil major and:

1)trades at 6X forward PE
2)pays 5% dividend
3)has sales growth of 18% YoY in the most recent quarter
4)has earnings growth of 8% YoY in the most recent quarter
5)has net profit margin of 25%
6)has ROE of 22% and ROA of 13%.