As we expect tougher times ahead, companies that may have less optimum financials may face potential challenges. We intend to scan for these companies based on the following criteria via CIMB iTrade filter tool:
- Selected exchange: Malaysia & Singapore
- Current ratio <0.85x
- Total Debt / Total Equity >125%
- EPS<=0.0 (i.e breakeven or loss-making)
- Past revenue growth rate <=0% (negative or no growth)
The summary of results is shown as below (as of 24 Aug 2016: 4 companies from Malaysia, 11 companies from Singapore):
Boustead Heavy / Boustead Holdings (MY)
We do not foresee any potential issue for this conglomerate as it has the backing of a strong institutional fund ( i.e LTAT) as its major shareholder. Further, it is on the path of de-leveraging process (Read More).
NPC Resources (MY)
NPC RESOURCES BERHAD is principally an investment holding company while its subsidiaries are involved in investment holding, provision of management services, operation of oil palm plantations and palm oil mills, trading of fresh fruit bunches (“FFB”), provision of transportation services, property letting and operation of hotel. The Company was listed on the Main Board of the Kuala Lumpur Stock Exchange on 7 May 2002. NPC has been raising proceeds from the divestment of its land assets for development of its planting capital expenditure. It is important for NPC to manage its gearing and working capital requirements whilst waiting for the maturity of its plantation assets.
The fall in crude oil has taken a toll on many O&G companies, especially with the offshore support vessel (OSV) sector. Perdana Petroleum Bhd. engages in the provision of offshore marine support services for the upstream oil and gas industry in the domestic and regional markets. It owns and operates vessels to support offshore activities from exploration, development, facilities installation, hook-up and commissioning, production, operation, and maintenance. The company was founded on December 28, 1995 and is headquartered in Kuala Lumpur, Malaysia. Analysts are waiting for further streamlining and restructuring of this company after it has been taken over by another Malaysian-listed company, Dayang Enterprise (Read more). Nevertheless, it has recorded a substantial loss for Q2, FY2016:
Kencana Agri Limited (“Kencana” or the “Group”) is a fast-growing producer of Crude Palm Oil (“CPO”) and Crude Palm Kernel Oil (“CPKO”) in Indonesia, with oil palm plantations strategically located in the Sumatera, Kalimantan and Sulawesi regions. Again, for palm oil companies, it is important to manage working capital requirements whilst waiting for maturity of its plantation assets.
Singapore-listed oil and gas company Linc Energy Ltd owes creditors A$289.4 million ($210.28 million) and should be wound up, according to its administrators.The company entered into voluntary administration a month ago, suffering from debt woes amid a slump in energy prices. Administrators PPB Advisory released a report on Friday recommending the company be liquidated.
Novo Group is a global steel trading, distribution, processing and manufacturing company that provides comprehensive services throughout the steel value chain. There has been a change in shareholding, paving way for a new business direction for the company:
EMS Energy posted a net loss of S$2.9 million for the first six months ended June 30, 2016. This was a reversal from a net profit of S$1.2 million a year ago.The engineering firm, which serves the marine, oil and gas industries, said the revenue decline was due to lower revenue from its “engineering, procurement and construction management – marine and offshore & trading” segment, which contributed S$9.9 million, compared to S$38.9 million in the previous year. the group plans to streamline its core operations, which include amongst other, cutting costs and manpower and building up its businesses to ensure steady stream of recurring income to weather the storm
This property investment company has a history of corporate governance issues. On 9 April 2015, the Company announced that it has requested for mandatory trading suspension over the Company’s shares from the Singapore Exchange Securities Trading Limited (“SGX-ST”). On 14 April 2015, the Company announced that it will be engaging an independent auditor to conduct a special audit to, inter alia, review and/or ascertain (as the case may be) the accounts and transactions of the Group, and whether there are any irregularities in the accounts and transactions of the Group for the financial years ended 31 December 2013 and 2014. On 3 July 2015, the new Board (being all new directors unrelated to the previous Board, the “Board”) announced that the Company has appointed Baker Tilly Consultancy (Singapore) Pte Ltd as its independent auditor (“Special Auditor”) to carry out an independent review of the disbursements of the Company and its subsidiaries, namely Trechance Holdings Limited and Futura Asset Holdings Pte Ltd (“Futura”), for the financial years ended 31 December 2013 and 2014.
THE auditors of KS Energy have raised concerns over the ability of the firm to continue as a “going concern”. The energy services provider had incurred a net loss of S$260.4 million in the 2015 financial year, noted KPMG.
S-Chip company. Suspension due to lack of funds.
Formerly known as Asiasons Capital.
Currently, under judicial management.
Mencast Holdings: The maintenance, repair and overhaul solutions provider for the global offshore, marine and oil & gas sectors on Aug 19 entered into banking facility agreements with UOB to redeem its outstanding bonds. These include a secured loan of up to S$50 million and secured facilities of up to S$24.9 million comprising term loan facility, trade facility and money-market credit facility.
The funds from these banking facilities will be used for the redemption of the outstanding bonds of S$50 million issued by the group and due on Sept 12, the refinancing of certain existing loan facilities, general trade purposes and general working capital purposes.
The company is closing its outlet in Tampines, which was the last directly-run branch of the company. The company had failed to pay about $570,000 in rent and compensation charges to landlord Tinifia Investment dating back to February 2009 for its Orchard Road outlet.
In summary, detailed fundamental analysis is required to ascertain the financial health of the companies.
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