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Boilermech

 

Analysts: Boilermech a leading palm oil mill boiler

 July 10, 2017, Monday

KUCHING: Boilermech Holdings Bhd (Boilermech) has been viewed as a strong player in the palm oil mill boiler industry.

The research arm of AmInvestment Bank Bhd (AmInvestment) pointed out that the stock is trading at a premium to its peers on the back of its strong market share in the boiler industry, proven track record and roster of blue-chip clients.

However, it noted that despite the aforementioned attributes, the research team pegged a ‘hold’ recommendation on the group as it believed that its valuations are stretched and the group’s earnings growth are still in the early stage of recovery.

Nevertheless, it pointed out that some of its positive attributes include its range of boilers with different grates and prices.

“Backed by a proprietary combustion technology, the boilers are efficient and reliable. Boilermech’s market shares are estimated at 40 to 50 per cent in Malaysia and 30 per cent in Indonesia.

“The group is the second largest boiler manufacturer in Indonesia presently,” it noted.

Aside from that, it pointed out, “The group is on its way towards becoming an integrated player in the palm oil mill chain. With its water treatment and biogas operations, Boilermech is poised to take advantage of the MPOB’s potential requirement that all palm oil mills must have biogas facilities in the future.

“Currently, most of Boilermech’s earnings are from the manufacturing and installation of boilers.”

The research team also highlighted that the group is well-positioned to capture a slice of the biogas market in Sarawak.

“According to the MPOB, there are 76 palm oil mills in Sarawak currently,” it said.

Overall, AmInvestment said, Boilermech’s balance sheet is healthy as the group has net cash of RM55.8 million as at end-March 2017 while its gross borrowings were a small RM8.3 million.

It also noted that the capital expenditure (capex) cycle of the plantation industry is just starting to pick up after being affected by the downturn in CPO prices in 2014 and 2015.

Boilermech manufactures boilers mainly for palm oil mills.

http://www.theborneopost.com/2017/07/10/analysts-boilermech-a-leading-palm-oil-mill-boiler/

QL associate Boilermech to raise RM11.5m from ACE listing

QL associate Boilermech to raise RM11.5m from ACE listing
Tags: Boilermerch Holdings Bhd | QL Resources Bhd

Written by Daniel Khoo
Friday, 15 April 2011 11:31


KUALA LUMPUR: Boilermech Holdings Bhd will raise RM11.52 million from its listing on Bursa Malaysia’s ACE Market, which is scheduled for May 5.

The company, an associate of food and agriculture group QL Resources Bhd, is a manufacturer of biomass boilers mainly for the palm oil milling industry.

It also serves other industries such as sugar milling, rubber-based manufacturers, food processing and palm oil refineries. QL will see its stake dilute to 35.03% after the listing.

The IPO will see Boilermech conducting both a public issuance and an offer for sale.

Under the public issuance, Boilermech will issue 34.9 million new shares of 33 sen each worth RM11.52 million, of which 19.25 million shares will be allocated for application by private placement to identified bumiputera investors, eight million shares for the public and 7.65 million shares for application by eligible directors and employees.

The IPO will also see an offer for sale of 13.5 million shares each totalling RM4.46 million by its major shareholders of which nine million shares will be privately placed out to bumiputera investors approved by the Ministry of International Trade and Industry and another 4.5 million shares by private placement to identified investors.

Of the proceeds raised for Boilermech, the company will use RM4 million for business expansion plans, RM2.5 million for repayment of its term loan, RM3.32 million for working capital and RM1.7 million to defray listing expenses.

(From left) OSK Investment Bank director/head of equity capital market Gan Kim Khoon, Boilermech Holdings Bhd chairman Dr Chia Song Kun, OSK Investment Bank director of corporate finance Tan Meng Kim and Leong at the launch of Boilermech’s prospectus yesterday.


“The group also intends to utilise RM500,000 of the proceeds towards intensifying its sales and marketing efforts in palm producing and agricultural-based processing countries in Southeast Asia, the African continent and the Central and South American region,” Boilermech said in a statement yesterday.

Directors who are offering for sale of a part of their stakes include Leong Yew Cheong who will see his stake diluted to 15.69% from 20.83% prior to the listing, as well as Wong Wee Voo, whose stake will be diluted to 10.67% from 14.13%. Chia Lik Khai, who is both a director at QL Green Resources Bhd and an executive director at Boilermech, said the investment which was done by QL just before Boilermech decided to list is synergistic and will see long-term benefits for both companies.

In its prospectus, the company highlights its main risk as the dependence on the palm oil industry, which in a downturn could mean lower palm oil production activities, fewer palm oil mills being built, lack of growth in plantation acreage and shrinking demand for its repairs and maintenance services.

Analysts note that with crude palm oil prices at above RM3,000 per tonne and production costs of RM1,200-RM1,400 per tonne, the outlook for the plantation sector remains buoyant. However, they note that labour and land cost issues could limit the sector’s expansion in Malaysia.


This article appeared in The Edge Financial Daily, April 15, 2011.