MTQ Corporation Limited

[Musicwhiz]

MTQ announced today that its Chairman Mr. Kuah Kok Kim had purchased another 45,000 shares in MTQ at an average price of 90.16 cents/share on Aug 31, 2010, further raising his stake to 22.64 million shares or 25.71% of the company, up from 25.66%. Note that his last purchase was on Aug 19, 2010 at 86.1 cents for 96,000 shares. This is the first time that he had bought shares at and above the 90 cent mark, and this signals continued confidence in the company's prospects despite a potential "big hit" to earnings from pre-operating expenses incurred for Phase I of their Bahrain expansion for Oilfield Engineering Division.

[Musicwhiz]

MTQ just announced that Mr. Kuah Kok Kim had purchased yet another 100,000 shares at $0.90 each on September 3, 2010; thereby increasing his stake further to 22,740,000 (25.82%) of the Company. With this transaction, this means that in total he has purchased 145,000 shares at the $0.90 mark and above, which I take to be a further signal that he shows confidence in the Company's prospects; and that the Company can continue to maintain its dividend policy.

MTQ also announced on the same day that the Company had injected a further USD 2,970,000 into MTQ Oilfield Services W.L.L (MTQ Bahrain), and the registered capital of MTQ Bahrain now stands at USD 3.6 million. The funds will be used for the construction of the facility and also for capex.

[tonylim]

He added another 100,000 shares at 0.90 on 13/09.

[Musicwhiz]

He added another 100,000 shares at 0.90 on 13/09.

Hi tonylim,

Yep! Thanks for the update. Apparently I did suspect he may have bought more when I saw the higher than usual volume traded yesterday for MTQ.....

[tonylim]

He added another 100,000 shares at 0.90 on 13/09.

Hi tonylim,

Yep! Thanks for the update. Apparently I did suspect he may have bought more when I saw the higher than usual volume traded yesterday for MTQ.....

Hi MW,
It seems he is one of the few big buyers for MTQ. He should know why he wanted to buy.
Once again must thank you for this good investment.
Cheers.

[Musicwhiz]

Hi tonylim,

Don't mention it, we're all here to share information and knowledge!

It was revealed that Kuah KK bought yet another 20,000 shares on Sep 14, 2010 at S$0.926, which so far has been the highest price he has paid for shares in MTQ! This raises his stake further to 22,860,000 shares or 25.96% of the Company. I can safely confirm he did not accumulate any on Sep 15, 2010 (today) as the volume was NIL!

[tonylim]

Hi tonylim,

Don't mention it, we're all here to share information and knowledge!

It was revealed that Kuah KK bought yet another 20,000 shares on Sep 14, 2010 at S$0.926, which so far has been the highest price he has paid for shares in MTQ! This raises his stake further to 22,860,000 shares or 25.96% of the Company. I can safely confirm he did not accumulate any on Sep 15, 2010 (today) as the volume was NIL!

Hi MW,
Well said.
Cheers and all the best.

[Musicwhiz]

Dear all, my analysis of MTQ's 1H FY 2011 Financials is now up on my blog. Please feel free to visit and leave comments, thanks!

A snippet as follows:-

"Inventories under current assets also increased 17.7% to S$19.6 million, and I should attribute this to the increase in stocking up required for the Bosch Superstore concept expansion, and also because of their acquisition of an outlet in Northern Territory back in March 2010, and also due to the subsequent purchase of Highway Diesel (a fuel injection business) in August 2010."

[Musicwhiz]

This morning, MTQ has announced that Blossomdale Investments (a 100% subsidiary of MTQ) will subscribe for 200 million shares in Neptune Marine Services Limited, a company dealing with subsea services and listed on the Australian Exchange (ASX: code is NMS).

The shares were offered at A$0.05 per share, and is part of a restructuring plan by NMS to strengthen its Balance Sheet and raise funds. MTQ will thus pay an aggregate total of A$10 million (about S$12.93 million) and end up owning 12% of NMS after the exercise (Total issued share cap = 1.667 billion shares). This amount was paid for in full in cash using the internal cash resources of MTQ.

The rationale for this investment is that MTQ views synergy between NMS's business and wants to participate as a strategic investor. NMS's business is complementary in nature and will offer MTQ better exposure in Australia and the United Kingdom.

As at Sep 30, 2010, MTQ's total cash balance stood at about S$20.6 million. Assuming they are paying for this fully in cash, it will take up more than 50% of their cash resources and leave the company with about S$7.6 million in cash. Since MTQ's last financial update in terms of Balance Sheet was nearly 5 months ago, perhaps this is not a very accurate measure of its Balance Sheet strength and cash flow generation capabilities.

If we further assume (rightfully) that a significant amount was spent on capex for the new facility (no doubt funded by bank loans) and machinery and equipment for the new workshop, I am beginning to wonder if MTQ may have over-extended itself in terms of cash management. The CEO Mr. Kuah Boon Wee himself did mention in an interview in The Edge Singapore that start-up losses were very likely at Bahrain, and with the unrest it may also adversely affect operations.

These are just my legitimate concerns as a shareholder. The Company will release its FY 2011 results in early May 2011.

[Musicwhiz]

NMS originally had 447,966,326 issued shares, and was trading at A$0.205 before suspension.

A total of 1,205,322,776 shares were issued at A$0.05, raising capital for NMS and clearing off the loans from their Balance Sheet (as well as providing them with working capital). The new enlarged issued share capital of NMS is now 1,653,289,102 shares.

Market cap of NMS before rights issue = A$91.83 million.

Assuming the same market cap after the rights issue, the ex-rights trading price for NMS should be A$0.0555 per share. Note that MTQ has subscribed for and been alloted 200 million shares (representing about 12.1% of the enlarged share capital) at A$0.05 per share.

NMS resumes trading on ASX tomorrow (March 10, 2011).