Technics Oil & Gas

Technics Oil & Gas: 3QFY11 results weaker.
Revenue at $45.7m, +66% yoy, but net profit at $7.5m only grew 6% yoy. EPS declined to 3.61cts, -28% yoy, due to the new shares issued arising from the TDR listing in Feb ’11 and warrants conversion.

The higher revenue was due to higher revenue recognition of work-in-progress for Contract Engrg (CE) projects, but these are lower margin than the fast-tracked EPCC projects, hence gross margins declined to 37% from 49% yoy.
The Group also saw admin expenses rise 52% yoy to $6.8m, due to depreciation for the newly acquired PPE and admin expenses of a new subsidiary incorporated in Mar ’11.

Co declares 3rd interim div of 3cts, taking ytd total div to 12cts. The co now has net gearing of 30% vs 16.3% in the previous qtr.

As at 3 Aug, orderbook stands at $103m for progressive delivert through to 1HFY12. Mgt notes that despite the fluctuation in oil prices, its customers remain committed to the previously agreed schedules for delivery of its contracts. The co continues to bid for new projects. Says that in view of its sizeable order book, current yard schedules and expected completion of its expanded yard space and new in-house facilities in early next yr, it anticipates better performance for FY11 vs FY10.

Stock trades at 8.4x trailing P/E, 3.5x P/B.