TECHNICS Oil & Gas had sent a request to SGX last week to halt its trading on the exchange after its share price tumbled almost 90% year-to-date from $0.63 to $0.07.
For its latest quarter, TECHNICS reported revenues fell 29% to $14.16 million, net loss of $4.42 million compared to $617,000 profit last year. The revenue dip however was cited as due to the sale of its Vina Offshore Engineering stake last year.
Below is a list of updates with regards to the company
- Posted a $6 million loss for first half of its fiscal year 2016 while revenues have fallen by half compared to 4 years ago
- Halted trading from January 2016 to February 2016 on news of selling a subsidiary but the talks did not work out in the end
- Received 2 trading query from SGX in less than 3 months period. One in the month of May and the other in February.
- Landlord Soilbuild Business REIT taken legal action to claim rent charges of $11.8 million on TECHNICS’s premises. The amount has since been disbursed to the REIT.
- Founder Robin Ting Yew Sue (resigned as chairman February this year) had his 13.6 million TECHNICS shares force sold by financial institutions for $2.1million in March 2016. Currently he owns 4.74% of the TECHNICS. He owned 10.68% of TECHNICS before the sale.
- Founder’s son Deren Ting Tiong Ching (step down as executive director in April this year) has filed a lawsuit against TECHNICS for a $4.9million loan repayment.
He also sold 14 million shares (6.18% ownership of the company) for $2.8 million. He now owns 0.06% of the TECHNICS compared to 6.18% before the sale.
- TECHNICS also lost a $70.5 million contract to build a lifeboat due to a non-fulfilment clause by parties on the contract’s effective date.
- Eversendai Corp (Malaysian-listed company controlled by businessman AK Nathan) recently became the biggest shareholder of TECHNICS, owning 29.87% of TECHNICS. This position however was built since 2012 and the latest transaction was dated on early March 2016 when Eversendai bought 10.3% of the TECHNICS.
Mr Nathan was appointed as executive chairman of TECHNICS on 1st April 2016.
Results for Financial Year 2015
FY 2015 results
Revenue up 7% to $74.2million
Gross Profit up 20% to $32.0million
Net Profit up $1.1million, up from losses of $7.5million last year
The company’s market capitalisation as of 3rd June 2016 is $16.24 million.
TECHNICS order book stands at $126.9 million as of 31st October 2015. If no new contracts were added in from that period till now, TECHNICS current order book will be $56.4 million (deducted the $70.5 million contract it lost).
Bulk of the proceeds ($97 million) TECHNICS received from selling its property (72 Loyang Way) was used to pay down its liabilities. It resulted in a net reduce in total liabilities by $30.3 million. As of 31st March 2016, TECHNICS’s total liability is 62.4% of its total assets. This figure is comparatively higher than at the end of its FY2015 (61.6%) although it is still lower than in FY2014 (65.8%). We expect this figure to go a lot higher after factoring out the amount of money it had paid out to Soilbuild REIT ($11.8 million) and if it were to lose the case against Mr Deren Ting, requiring them to pay back the loan of $4.9 million.
We took out the 2 large sum from TECHNICS’ cash holding (assuming worst case scenario) and its total liabilities immediately rose to 69.5% of total assets with less than $1million cash left over. When that happens, the company’s equity will be worth $44.8 million, above the current market capitalization of $16.24 million.
We do not think the company can reverse its current path of posting a loss for FY2016, neither do we think that a company that is highly leverage is a safe company to invest in.