Technics Oil & Gas

Technics Oil & Gas: Crashed following resumption; proposed major transaction fell through
Technics Oil & Gas crashed 81% in early trading after negotiations on a proposed major transaction fell through.

The counter was suspended since 31 Dec '15, as the company was involved in negotiations with a potential purchaser on its assets. In addition, the group was also involved in discussions with another party on a separate major transaction that could lead to a RTO deal.

However, both parties have not been able to come to agreement and have ceased negotiations.

Within the period of suspension, Technics released a dismal set of 1QFY16 results with widened net loss of $1.2m (1QFY15: -$0.6m) due to the absence of FX gain (1QFY15: $1.1m), while revenue tumbled to $15.2m (-18%) from weak market demand.

Notably in the recent results, the O&G services firm turned into operating cash flow negative of $2m (1QFY14: +0.1m), which resulted in a drain on its cash pile to $20.5m (4QFY14: $23.4m).

Subsequently, net gearing climbed to 0.4x from 0.3x at end-Sep '15.

At the current price, the counter trades at a 29% discount to its NAV/share of $0.28.