Mencast Holdings

[Nick]

Mencast delivers 20% growth in earnings to a record high of S$10.2 million for FY2011

- Revenue surged 76% to S$56.3 million mainly due to maiden revenue contributions from newly acquired subsidiaries
- Proposed first and final cash dividend of 1.2 cents per ordinary share, representing a payout of about 22%
- Group’s order book stood at S$19.1 million as at 31 December 2011, up 127.4% from last financial year

http://mencast.listedcompany.com/newsroom/mc280212.pdf [Press Release]

http://mencast.listedcompany.com/newsroo...8545.1.pdf [SGX Announcement]

2011 was an eventful year for Mencast as it transformed itself into a regional MRO player with a slew of corporate actions and the near completion of Mencast Central in Penjuru. The Group acquired Team Engineering Group, Top Great Group and Unidive Group for $43.35 million to be paid in 3 tranches over a 2 year period in the form of shares and cash with profit warranty in place. It also completed constructing the factory in its Penjuru site (35,000 sqm area) though the full completion of the facility will only be done in 2H 2012. The core manufacturing arm suffered a drop in revenue while the servicing arm maintain its revenue. The contribution of $29.2 million revenue from the 3 new acquisitions fueled the profit growth this year.

I will be looking to see how the Group integrate the acquired assets and how successful its investments in Penjuru will be in capturing new orders from larger vessels etc. The Group has raised its dividends slightly to 1.2 cents. Based on its last trading price of 58.0 cents, its market cap stands at $108 million.

(Not Vested)

[Nick]

INCORPORATION OF SUBSIDIARY BY MENCAST ENERGY PTE. LTD.

http://info.sgx.com/webcoranncatth.nsf/V...F001448DC/$file/Incorporation_Of_Mencast_Energeers_12032012.pdf?openelement

This announcement is highly interesting as it suggests a new business division is in the midst of being formed. According to the announcement, "the principal activities of MEPL will be (i) high-tech engineering in the scope of air, water and power sciences; and (ii) research and development, prototyping, and commercialization of technologies with green and CSR content." I am not certain whether is this related to the marine MRO business but it seems to be like an entire new segment ! Based on slide 11 and 16 of the latest presentation slides, the segment energy solutions was mentioned. Hopefully more details will be revealed soon.

If I misunderstood the announcement, please point out my errors haha !

http://www.nextinsight.net/index.php?opt...2&Itemid=1 [Nextinsight article]

Mencast is currently trading at 56.5 cents.

(Not Vested)

[Musicwhiz]

This announcement is highly interesting as it suggests a new business division is in the midst of being formed. According to the announcement, "the principal activities of MEPL will be (i) high-tech engineering in the scope of air, water and power sciences; and (ii) research and development, prototyping, and commercialization of technologies with green and CSR content." I am not certain whether is this related to the marine MRO business but it seems to be like an entire new segment ! Based on slide 11 and 16 of the latest presentation slides, the segment energy solutions was mentioned. Hopefully more details will be revealed soon.

Could the Company be trying to bite off more than it can chew?

After its recent string of M&A, the right thing to do would be to integrate, rationalize and stabilize first before embarking on other new ventures. If the announcement is indeed true and they are venturing into a new business division, then my view is that Management may be too aggressive and thus caution is advised when it comes to assessing the future earnings and cash flows of the Company.

Like in the case of Aztech (probably a rather extreme case but just as an illustration), too much diversification can turn out to be "diworsification".

[Nick]

This announcement is highly interesting as it suggests a new business division is in the midst of being formed. According to the announcement, "the principal activities of MEPL will be (i) high-tech engineering in the scope of air, water and power sciences; and (ii) research and development, prototyping, and commercialization of technologies with green and CSR content." I am not certain whether is this related to the marine MRO business but it seems to be like an entire new segment ! Based on slide 11 and 16 of the latest presentation slides, the segment energy solutions was mentioned. Hopefully more details will be revealed soon.

Could the Company be trying to bite off more than it can chew?

After its recent string of M&A, the right thing to do would be to integrate, rationalize and stabilize first before embarking on other new ventures. If the announcement is indeed true and they are venturing into a new business division, then my view is that Management may be too aggressive and thus caution is advised when it comes to assessing the future earnings and cash flows of the Company.

Like in the case of Aztech (probably a rather extreme case but just as an illustration), too much diversification can turn out to be "diworsification".

I do concur MW. If this new business is going to be grown organically within Mencast Central to support its growing Marine MRO business, I guess it is fine. But if this turns out to be a whole new field, I do worry about their ability to execute it properly in light of their need to integrate 3 major acquisitions and start up Mencast Central for revenue generation in 2012. Until more details are revealed, it will be difficult to speculate. Of course, they may end up succeeding (if they expand swiftly) and grow into a conglomerate within a decade !

[Musicwhiz]

Yes, Nick agree and thanks for your points.

Swift expansion comes with a lot of risks - either you succeed spectacularly or you flop spectacularly (implode).

I much prefer slow and steady growth, and the certainty of cash flows/dividends.

Anyway, let's monitor Mencast and see what happens over time.

[Nick]

Mencast trading halted...probably related to the recent announcement ?

(Not Vested)

[Musicwhiz]

Mencast trading halted...probably related to the recent announcement ?

(Not Vested)

Ahhh, the moment of truth. Let's wait for the exciting news....

[Nick]

PROPOSED ISSUANCE OF 22,500,000 NEW SHARES, REPRESENTING APPROXIMATELY 11.8% OF THE TOTAL EXISTING ISSUED SHARE CAPITAL OF THE COMPANY (THE “PLACEMENT”)

http://info.sgx.com/webcoranncatth.nsf/V...60081F15B/$file/Placement_Announcement_20March2012.pdf?openelement [SGX Announcement]

Mencast has joined the ranks of Ezra and Swiber recently by placing out new equity to raise funds for its growth. The list of subscribers are certainly interesting:

SME - CO: 3.7%

SME Co-Investment Fund Limited Partnership is a private equity fund managed by Heliconia Capital Management Pte. Ltd., an investment firm wholly-owned by Temasek, an Asia investment company headquartered in Singapore. SME Co-Investment Fund Limited Partnership, alongside other private equity investors, provides growth capital to Singapore headquartered small-to-medium sized enterprises, with a view to develop them into globally competitive companies.

Dymon - 2.9%

Dymon Asia Special Opportunities Fund is an Asian focused fund, investing in promising private and listed companies across Asia. Dymon Asia Special Opportunities Fund is part of the Dymon Group, which manages close to US$2.8 billion and is headquartered in Singapore.

Wong Chee Herng (2.6%) and Gay Chee Cheong (2.6%) are individual private investors.

The market has reacted positively with the placement with its share price up by 5.3% at 59.0 cents with 3.56 million shares traded. I wonder whether will the proceeds of $11.89 million be channeled to the new Energy Solutions division ?

(Not Vested)

[Musicwhiz]

Ah, the beauty of optimism! Yes, buy, buy, buy!

Let's see how things pan out. 11% dilution to EPS, which should (hopefully) be compensated by a rise in earnings >11% through M&A or organic growth to offset the dilution.

[ValueBeliever]

I think this should be the right approach of funds and the Co. They brought in new life of a once toy casting Co. re-inject new businesses and now on the path to growth.

MRO on steering gear and propulsion are highly specialize work that Spore is lacking. Rope work and diving are high risk, high margin work. So long as offshore is booming - Sembwan marine and Keppel Combined are the world largest offshore rig builder - if not wrong both have heavy demand for uni-dive service. Great is in offshore service and a small technics oil and gas.

Goh multi-fold gain will continue as this Co. has very interesting integration game going on....I m also watching MTQ - son is executing carefully - for small cap cannot miss earnings and MTQ. If MTQ drop worth to take a closer look on how bahrain plant set up is going? Also BOP technology may be changing for high pressure and stricter survey....cannot loss customer otherwise big concern.

Better than listing lots of China S chip and draining confidence and making singaporean loss money and face...I still cannot get over it and hate every time chinese Co. list here!! This is the right way to go... small caps, new hope for Singapore - slow but steady...