Sunday, December 7, 2014

APB ... Insulated From Falling Oil Prices !!!

An established process equipment fabricator involved mainly in the petrochemical, oleochemical and energy sectors.

It is said to be well insulated from falling oil prices as it produces pressure vessels, heat exchangers and heat recovery steam generators – equipment that will be needed in the ongoing refinery and petrochemical integrated development project in RAPID.

Petronas is unlikely to cut its commitment to RAPID despite the current low oil price.

Its net assets per share stood at rm1.61 in FY2014.

It had been delivering uninterrupted profits and consistently paying dividend of 6.5 sen per share except in FY2011 when it paid three sen per share.

Downstream is not expected to be as badly affected by low crude oil prices as the upstream segment. APB’s fortunes depend on whether it will get contracts from Petronas for the RAPID project. While the group is not directly bidding for any part of the project, it could benefit from subcontracts especially the on the process equipment side.

The stable outlook for the downstream segment, especially in the petrochemical industry, will prop up process equipment manufacturers including APB.

Besides supplying the process equipment to the petrochemical industry, it also operates the oleochemical industry has greatly helped the group ride out of the downturn in fabrication demand in the past few years….

APB’s order book stood at rm70 million as at July 2014 which will last them for at least the next nine months.

It posted a net profit of rm12.2 million, up 17.6% year on year. It is also doing well operationally, It undertook higher margin contracts in the final quarter ended Sept 30 2014. As a result, 4QFy2014 revenue declined 19.5% to rm30.2 million year on year while gross margin rose to 27.8% from 20.4%.

It has a clean balance sheet with no borrowings. Its cash and cash equivalents stood at about rm40 million as at Sept 30 2014.

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