Monday, February 23, 2015

'Turnaround' - Frontkn

It posted a net profit tripled year-on-year to RM5.26 million in third quarter financial year ending on Dec 31, 2014 (3QFY14) from RM1.57 million. This was on the back of 65.3% increase in revenue to RM85.55 million in 3QFY14, from RM50.54 million in previous corresponding quarter.

The group attributed the improved performances from subsidiaries’ contribution in Taiwan and Malaysia. There was a ramp up in the semi-conductor business in Taiwan due to improved outlook in this sector. In Malaysia, it was mainly due to the recognition of progressive revenue from ATT Tanjung Bin Sdn Bhd’s project in Tanjung Bin (Johor) coupled with higher revenue from the oil and gas division.

The disposal of investment in an associate company also significantly reduced the group’s share of losses in 3QFY14 compared with the previous corresponding period.

In the cumulative nine-month period, Frontken’s net profit ballooned to RM11.62 million, from a mere RM127,000 in preceding corresponding period; whilst revenue grew 50.35% to RM204.79 million, compared with RM136.21 million last year.

Its acquisition of 45% stake in TTES Team & Specialist Sdn Bhd (TTES) in 2QFY14 has brought in positive contribution to the group in 3QFY14 and thus enhance its confidence that the synergised effects from acquisition of TTES will continue to improve the group’s performance in 2014.

Frontken provide surface metamorphosis technology which is basically for the maintenance of equipment in the semiconductor, oil and gas and other industries.

To recap in Aug 2014 it was reported that a corporate exercise is brewing in the company which could see the engineering firm being taken private by its single largest shareholder.

Jorg Helmut Hohnloser who owns 28.82% stake is believed making an offer of between 18 sen and 20 sen per share to take the company private.

The second largest shareholder is LTH with a 6.03% stake.

The company has a piece of undervalued land in Tuas, Singapore. It is probably worth much more if the piece of land is revalued.

It has a 11154 sqm land at Gul Circle in Singapore that was acquired in 2001 while its subsidiary has a 16966 sqm land in Tainan City, Taiwan, which was acquired in 2004. As at Dec 31 2012 the audited net book value of the two parcels of land in Singapore and Taiwan were rm18.14 million and rm37.92 million.

Its net assets per share was 22 sen as at March 31 2014.

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