MTQ Corporation Limited

[Musicwhiz]

Dear all, my analysis of purchase of MTQ Part 2 has been posted on my blog. Please feel free to visit and leave comments, thanks!

[Musicwhiz]

Dear all, my analysis of purchase of MTQ Part 3 has been posted on my blog. Please feel free to visit and leave comments, thanks!

A snippet as follows:-

"The new facility, once completed, will provide engineering, repair and refurbishment services to a wide range of oilfield equipment used in oil drilling operations around the Gulf and surrounding region. The total cost of investment is expected to be US$20 million, including purchase of new capital assets and construction cost. It will be funded by external borrowings and shareholders’ funds.

The rationale for investment is to service clients in the Middle East, which MTQ is unable to reach out to because of geographical distance and also because its current Singapore facility only caters to customers in China, India and Australia (closer proximity). This new company can service clients from the Gulf Cooperation Council (GCC), which is made up of Saudi Arabia, Kuwait, Qatar, the UAE, and the Sultanate of Oman and Bahrain."

[Musicwhiz]

Dear all, MTQ's 1H FY 2010 Analysis is now up on my blog. Please feel free to visit and leave comments, thanks!

A snippet as follows:-

"The revenue mix has also changed slightly as a result of the weakness in Oilfield Engineering versus the resilience shown by Engine Systems. Previously, and in my analysis of purchase, I had stated Engine Systems as one of the “cons” as my analysis had thrown up the fact that operating margins were low and revenue was flat over the last couple of years. However, it was a pleasant surprise to learn that revenue from Engine Systems stayed fairly constant at S$19.5 million (down S$0.2 million from 1H 2009’s S$19.7 million), compared to Oilfield Engineering’s revenue drop to S$19.7 million from S$25.4 million. As a result, the revenue mix for Oilfield Engineering versus Engine Systems shifted from 56%:44% to 50%:49% (remaining 1% came from “others””)."

[grandmaster89]

Thank you Musicwhiz for your blog posting. It is very informative. If only I could write and analyse as well as you haha! MTQ is one of the few small SGX-listed coys who appreciates her shareholders. It was nice to be given the company newsletter as it made me feel part of the team.

Part of the reason why I remain invested in the company is the CEO's drive and spirit. He is always finding ways to improve and expand the company. The Bosch deal was a pleasant surprise. I was initially under the impression that he intended to slowly let go of the engine division and swing fully to the oil engineering division based on its dismal financial performance over the past 3 years. But surprisingly it did well, and the CEO capture of Bosch shows his determination to help Engine Systems buck up to improve shareholder's value.

[Musicwhiz]

Thank you Musicwhiz for your blog posting. It is very informative. If only I could write and analyse as well as you haha! MTQ is one of the few small SGX-listed coys who appreciates her shareholders. It was nice to be given the company newsletter as it made me feel part of the team.

Part of the reason why I remain invested in the company is the CEO's drive and spirit. He is always finding ways to improve and expand the company. The Bosch deal was a pleasant surprise. I was initially under the impression that he intended to slowly let go of the engine division and swing fully to the oil engineering division based on its dismal financial performance over the past 3 years. But surprisingly it did well, and the CEO capture of Bosch shows his determination to help Engine Systems buck up to improve shareholder's value.

Haha, thanks man you give me a lot of credit indeed, and I am flattered. Truth is I am also learning and constantly trying to improve, and am learning how to sharpen my research and analysis from value investing experts (some of whom are on this forum!).

I haven't met the CEO personally, but if what you say is true, then the long-term prospects for shareholders is quite attractive. I had also thought Engine Systems was the "weak link", but the Bosch deal caught me by surprise as well and now I have to relook at the dynamics of the entire business from the perspective of these 2 business units; and not just focusing on the so-called more promising Oilfield Engineering Division. Such is the dynamic and changing nature of business. Interesting.

[grandmaster89]

Hi Musicwhiz,

I am just wondering besides Hai Leck, what other quoted securities does MTQ Corp invest in? According to the 2009 AR, they mentioned that they hold on to securities listed in Australia. Do you know what they are and were they the one that was recently disposed?

Investment securities are investment in equity instruments that are quoted on the Singapore Exchange Securities Trading Limited and Australia Securities Exchange. They are classified as available-for-sale financial assets and held-for-trading financial assets
respectively, and are carried at fair value.

Cheers,
GM89

[Musicwhiz]

Since no major newspaper is reporting on MTQ, let me be the one to highlight some recent news:-

MTQ had announced yesterday on their expansion of their Engine Systems division into the Nothern Territory of Australia, by the A$500,000 purchase of a Company called Premier Fuel Injection Pty Ltd.

From the press release: "Being the only Bosch Diesel Centre, Denso Service dealer and operator of a 4WD dyno with a diesel focus in NT, Premier is a private company specialising in the supply, testing and repair of diesel engine parts. The business assets acquired would include plants, equipment, tooling and inventories of Premier, internally valued at approximately A$512,000."

Mr. Kuah Kok Kim has commented on the acquisition as follows: “This newly-added branch in NT would definitely enhance the value we bring to our new and existing customers. In addition to the vast NT market, its proximity to countries such as Indonesia and Timor Leste will enable it to serve as a strategic gateway into the resource rich region, where there are vast opportunities for our engine systems business. Through the expansion of our geographical reach, we are effectively broadening MTQES’ products and service offerings at minimal cost by leveraging on Premier’s readily available network and infrastructure.”

My views:- MTQ seems to be aggressively building up their Engine Systems division, which surprised me somewhat as I had thought the Company's core profit-centre and main cash flow generator was in their Oilfield Engineering division. It would seem that with the planned Bahrain expansion, this area of the business would already be "covered"; thus MTQ is moving to expand the other leg of its business; firstly by partnering Bosch as announced in Nov 2009, and now extending MTQES' reach to the Nothern Territory through an M&A. Whether or not this will contribute to bottom line remains to be seen, though.

[millionairemind]

MW - Tks for posting your frequent analysis on the stocks you cover. They are very detailed and we could all learn from it.

[Musicwhiz]

MW - Tks for posting your frequent analysis on the stocks you cover. They are very detailed and we could all learn from it.

MM, don't mention it. Just glad you guys find it useful. I also use this as a record of the business activities of the companies I own, and to track their slow and steady growth and expansion. I am also learning a lot from you as well. Let's all share knowledge together!

[tonylim]

CEO Kuah Kok Kim bought another 93,000 shares from open market at 0.72/share on 17/3.