KKKoh 3.2017KK Koh, executive chairman of Federal International. Photo by Sim Kih Federal International (2000) is a rare performer in the oil & gas space: It is profitable, it delivers dividends consistently, and it has a low level of borrowings.

And its valuation? In its recent Powerpoint presentation, it noted that its stock traded at 29 cents, which was a historial PE of 5.6x and price/book of 0.5x. 


After achieving $7.3 million in net profit in 2016, it proposed a final dividend of 1.5 cent a share (2015: 1.5 cent).

It surprised with a special dividend of 0.5 cent a share. Together, they translate into a yield of 7.1%.


Federal is paying 2 cents a share in dividend -- which constitutes 39% of its earnings -- despite a 65% fall in 2016 net profit on a 31% fall in revenue.

The weaker performance stemmed in part from a fall in sales to Chinese shipbuilders.


LohCheeMeng 3.2017Loh Chee Meng, CFO.
Photo by Sim Kih
Several factors, however, point positively to its prospects:

• Federal is not highly leveraged, unlike many of its oil & gas peers. Its n
et debt to equity ratio is only 13.7%. 

• Cash & bank balances (including deposits): S$ 17.0 m.
 
• Earnings visibility with order book of S$94 m, including orders for the Zawtika Development Project Phase 1C.

Compare this with its 2016 revenue of S$ 89.5 m. The order book is for procurement of equipment for oil & gas projects.

• Its key partner, an established EPCIC (Engineering, Procurement, Construction, Installation & Commissioning) contractor, PT Gunanusa Utama Fabricators (PTG), is planning to bid for projects totalling about USD1 billion in 2017.

(PTG currently has an order book of US$305 million for the offshore platform fabrication and installation under the Zawtika project awarded by Thai state-owned PTTEP International.)

Federal is working closely with PTG in its upcoming tenders and continues to provide procurement services to PTG, under a master agreement they signed in 2015.

The ties are tight given that the founder and executive chairman of Federal, Mr KK Koh, is also the President Commissioner of PTG. Furthermore, an executive director of Federal, Don Koh, is a Commissioner of PTG. 

And there there is real Federal money in PTG. It's not a straightforward case but Federal has potentially a 62.5% stake in PTG via a US$9 million loan to a shareholder of PTG. (For more details, see the Powerpoint presentation here.)

That stake is poised to raise Federal's value: PTG is working on a 2018 listing on the Jakarta Stock Exchange.  

Federal briefing 3.2017@ Federal's FY2016 briefing. Photo by Sim Kih

You may also be interested in:


You have no rights to post comments

Counter NameLastChange
AEM Holdings2.3600.010
Best World2.440-0.040
Boustead Singapore0.9600.010
Broadway Ind0.128-0.001
China Aviation Oil (S)0.9100.005
China Sunsine0.410-
ComfortDelGro1.4600.010
Delfi Limited0.900-
Food Empire1.320-
Fortress Minerals0.3200.005
Geo Energy Res0.305-0.010
Hong Leong Finance2.4900.010
Hongkong Land (USD)2.8500.030
InnoTek0.535-
ISDN Holdings0.295-0.010
ISOTeam0.0430.004
IX Biopharma0.045-0.003
KSH Holdings0.250-
Leader Env0.0500.002
Ley Choon0.043-
Marco Polo Marine0.069-0.002
Mermaid Maritime0.139-0.003
Nordic Group0.315-0.010
Oxley Holdings0.0890.001
REX International0.135-0.002
Riverstone0.795-0.010
Southern Alliance Mining0.445-0.005
Straco Corp.0.485-
Sunpower Group0.210-
The Trendlines0.069-
Totm Technologies0.022-0.001
Uni-Asia Group0.8250.005
Wilmar Intl3.3800.010
Yangzijiang Shipbldg1.770-0.010
 

We have 1078 guests and no members online

rss_2 NextInsight - Latest News