(23-09-2016, 07:38 PM)Clement Wrote: [ -> ]Well, I disagree.
Pec's services mainly deal in the downstream part of the oil and gas value chain as well as the chemical industry. If anything, the current price of crude oil will force the middle eastern producers to move down the supply chain and start exporting refined products. This investment in refining and storage capacity was exactly what PEC have positioned themselves to benefit from.
There are not that many companies on the market that trade near net cash, have a growth strategy in place, have a recurring revenue stream and generates strong cash flows. Pec was cash generative even last year, when they posted a loss due to bad debts due from Jurong Aromatics.
as I said they have larger projects completing and depleting order book from
As at 30 September 2015, the Group’s order book stood at S$315.0 million
As at 31 December 2015, the Group’s orderbook stood at S$239.7 million
As at 31 March 2016, the Group’s orderbook stood at S$206.8 million.
The Group is actively participating in several tenders in Asia and the Middle East to build up its orderbook, which stood at S$161.8 million excluding maintenance contracts as at 30 June 2016
(I only see a company running down its previously bountiful orderbook which IIRC stod at 500mio+ not so long ago)
Revenue from recurring part is stable but also going down, around 149million/yr now.
Hence growth story is just another story, just after some big project there they manage to get suddenly expect big expansion there? Evidence doesn't point there.
Also the recent bump in dividend from 1c to 2c+1special is still pretty low payout, especially from a company chock full of cash. Historically its around 1 to 2c during normal year.(this is the reason I did not buy in despite the low valuation and being on my radar for some time.)
Net cash is ~132million(87.86% Mcap) now but am pretty sure if they get any projects net cash will go down significantly as they ramp up business. Most of it is probably reserved for future working capital purposes.
Management view :
[The outlook for the global process industry remains challenging in the near to medium term with the continued volatility in crude oil prices. However, we believe that PEC's strategy to expand its overseas presence and enhance its capabilities will put PEC in good stead to secure project opportunities
when the industry recovers.
The Group's proven processes, capabilities and network of facilities have enabled i`Zt to deliver fast-tracked and technically challenging projects such as LPG projects. The Group is actively participating in several tenders in Asia and the Middle East to build up its orderbook, which stood at S$161.8 million excluding maintenance contracts as at 30 June 2016.]
Hence i suspect share price is being pumped by the analyst report and speculators rushing in, rather than investors who actually believe there will be any sort of substantial growth in its overseas expansion (which are not a sure thing, they still have to tender, and evidence shows its not going up.) Its up almost 50% from 40c level in just a few weeks, very unlikely suddenly everyone realise the "value" and jump in