Technics O&G

Technics O&G: 1QFY14 net profit slumped 52% y/y to $343k despite revenue surge of 40% to $15.7m, as a result of decreasing gross margins (-12.9 ppts to 31.5%) and lower share of profits from associates (-71%). The stong topline came on the back of increased contributions from subsidiaries. The group has embarked on an upgrading of its existing jetty to cater for future usage by offshore vessels. In addition, construction of a new building block at its existing property at 72 Loyang Way Singapore has started. Subjected to the approval of the Jurong Town Corporation, the group intends to sublet some of the premises in this new building to potential users who are operating in the marine-related and offshore oil & gas industry. This is intended to add a new revenue stream to the Group and to enable the Group to foster a closer working relationship with the relevant industry operators, with a view to creating new business potential for its core business activities as an offshore oil and gas service provider. At $0.64, Technics Oil & Gas trades at 1QFY14 annualized 133.3x P/E and 2.1x P/B.