Copyright@http://lchipo.blogspot.com/
Follow us on facebook: https://www.facebook.com/LCH-Trading-Signal-103388431222067/
Date
Open to apply: 25/06/2020
Close to apply: 01/07/2020
Listing date: 15/07/2020
Share Capital
Market Cap: RM116.850 mil
Total Shares: 285 mil shares (Public apply: 14.25mil, Company Insider/Miti/Private Placement: 73.876mil)
Business
Specialise in providing well services. O&G well services (well leak repair, well perforation, well testing, wash and cement, Wireline, O&G production enchancement.
Geo: Malaysia 96.54%, Mauritania 3.46%, Vietnam 3.46%.
Fundamental
Market: Ace Market
Price: RM0.41 (EPS:0.034)
P/E: PE12.06
ROE: 19.16 (IPO pro Forma III)
ROE: 31.56 (2019), 18.31(2018), 1.76 (2017), -25.86 (2016)
Cash & fixed deposit after IPO: RM0.0382 per shares
NA after IPO: RM0.18
Total debt to current asset after IPO: 0.72 (Debt: 38.097mil, Non-Current Asset: 41.077mil, Current asset: 52.663mil)
Dividend policy: No fix dividend policy.
Past Financial Proformance (Revenue, EPS)
2019: RM80.031 mil (EPS: 0.034)
2018: RM45.091 mil (EPS: -0.0027)
2017: RM20.874 mil (EPS: 0.0025)
2016: RM9.578 mil (EPS:0.0018)
Net Profit Margin
2019: 12.09%
2018: 8.90%
2017: 1.51%
2016: -43.67%
After IPO Sharesholding
Datuk Tai Hee: 10.39%
Dato' Wan Hassan Bin Mohd Jamil: 36.84%
Thien Chiet Chai: 13.38%
Eric Lim Swee Khoon: 0.18%
Siti Zurina Binti Sabarudin: 0.18%
Elain Binti Lockman: 0.18%
Directors Remuneration for FYE2021 (from gross profit 2019)
Datuk Tai Hee: RM76k
Dato' Wan Hassan Bin Mohd Jamil: RM578k
Thien Chiet Chai: RM578k
Eric Lim Swee Khoon: RM76k
Siti Zurina Binti Sabarudin: RM76k
Elain Binti Lockman: RM76k
Total director remuneration from gross profit: RM1.460 mil or 7.06%
Key Management Remuration for FYE2021 (from gross profit 2019)
Mad Haimi Bin Abu Hassan: RM418k
Ho Khee Jeem: RM332k
Anwaruddin Bin Saidu: RM292k
Alphonsus Chiu Ching Chuen: RM372k
key management remuneration from gross profit: RM1.436mil or 6.95%
Use of fund
Purchase of well testing equipment: 42.70%
Working capital: 21.01%
Repayment of bank borrowing: 21.35%
Listing Expenses: 14.94%
Industry CAGR%
Crude oil 2015-2019: -2%
Crude oil 2017-2019: -4.3%
Natural Gas 2015-2019: 1.9%
Natural Gas 2017-2019: -1.3%
Petronas Capital Investment (Msia) 2015-2019: -8.2%
Petronas Capital Investment (Msia) 2017-2019: -17.8%
Competitor
Deleum: PE7.66
Dialog: PE32.96
Uzma: PE5.6
Conclusions
Good thing is:
1. Over the past 4 years revenue continue to increase.
2. Have good track record of business award 2014-2020 (prospectuses page 70-72)
3. Cover all stage of an O&G well's lifecycles.
The bad things:
1. ROE is not stable over past 4 years.
2. Total debt to current asset ratio still acceptable but a bit high.
3. No fixed dividend policy.
4. Business mainly focus in Malaysia.
5. Director remuneration percentage from gross profit over 3%.
6. Repayment of bank borrowing using IPO fund 21.35%
7.Overall CAGR O&G industry is growing at negative rate.
Conclusions
The company is in challenging environment (O&G CAGR is in negative rate). External factor will limit their growth in futures & the world is moving toward green energy. If the company continue stay in same industry, it might not suitable for long term investment.
IPO Price: RM0.41
Good time: RM0.54 (PE16)
Bad time: RM0.27 (PE8)
*Valuation is only personal opinion & view. Perception & forecast will change if any new quarter result release. Reader take their own risk & should do own homework to follow up every quarter result to adjust forecast of fundamental value of the company.