Pantech - Return on Retained Earnings

Pantech
Year		DPS		EPS		Retained EPS
2002
2003
2004
2005
2006
2007		0.7		5.5		4.8
2008		1.6		6.8		5.2
2009		2.3		13		10.7
2010		4.2		10.5		6.3
2011		2.8		6.2		3.4
Total		11.6		42		30.4
2007-2011
EPS increase (sen)				0.7
DPO				28%
Return on retained earnings				2%
(Figures are in sens)

A quick look at Pantech (26.4.2010)

Pantech Group Holdings Bhd Company

Business Description:
Pantech Group Holdings Bhd. The Group's principal activities are trading, supplying and stocking high pressure and specialised steel pipes, fittings, flanges, valves and other related products for use in the oil and gas, gas reticulation, marine, onshore and offshore heavy engineering, power generation, petrochemicals, palm oil refining and other related industries. Other activities are manufacturing and supplying butt-welded carbon steel fitting such as elbows, tees, reducers, end-caps and high frequency induction long bends for use in the oil and gas and other related industries. The Group is also involved in investment holding, property investment and management service. Operations are carried out in Malaysia and Singapore.

Wright Quality Rating: DANN Rating Explanations











A quick look at Pantech (26.4.2010)
http://spreadsheets.google.com/pub?key=t3zI0ldlAvJCuRJQIBPSJ9g&output=html

Pantech's 3Q net profit down 32% to RM11.7m

Pantech's 3Q net profit down 32% to RM11.7m

Tags: Pantech Group Holdings Bhd | third quarter

Written by The Edge Financial Daily
Monday, 25 January 2010 22:23

KUALA LUMPUR: Pipemaker PANTECH GROUP HOLDINGS BHD [] posted a 32% drop in net profit to RM11.7 million for its third quarter ended Nov 11, 2009 (3QFY10) from RM17.3 million a year earlier mainly due to lower sales volume from the trading division and lower output from manufacturing.

Revenue fell 30.6% to RM92.2 million from RM132.8 million, while basic earnings per share (EPS) dropped to 3.14 sen from 4.6 sen. It declared a special second interim single-tier dividend of 1.5 sen per share share versus eight sen per share a year earlier.

For the nine months to Nov 30, 2009, the group's net profit fell 21% to RM40.1 million from RM50.9 million a year earlier mainly due to lower contribution from the manufacturing division.

Revenue fell 9.8% to RM335.5 million from RM371.8 million. EPS fell to 10.71 sen from 13.57 sen while dividends declared rose to three sen from two sen in the same period in FY09.

On its prospects, Pantech said while there were signs of economic recovery, economic conditions continued to be challenging for the group.

“The board will continue its cautious approach undertaken to monitor, mitigate and respond to any negative economic headwinds through diligent administration of operational cost controls and cash flows.

“Barring any unforeseen circumstances, the board believes that the performance of the group for the current financial year will remain satisfactory while the long-term outlook of the oil and gas industry continues to be positive.”

Pantech: Strong growth prospects on cheap valuations

Pantech: Strong growth prospects on cheap valuations

Tags: InsiderAsia | Pantech

Written by InsiderAsia
Thursday, 15 October 2009 16:50



WE are upbeat on Pantech's (RM1) prospects going forward. The company has built a strong business franchise, reputation and track record as one of the largest one-stop centres for PFF (pipes, fittings and flow control products) solutions in the country.

In addition to a strong hold on the domestic market, Pantech has also made inroads overseas with its range of manufactured carbon steel fittings. Its customised long bends, in particular, have enjoyed good demand abroad including in the US, Asia and the Middle East.

Pantech maintains good profitability
Demand for PFF has demonstrated resilience over the past few quarters amid uncertainties in the global economy. And despite the sharp plunge in prices for steel products, Pantech is still running a very profitable business. This is underscored by its earnings results for the first half (1H) of the financial year ending February 2010.

Sales were up by about 2% year-on-year (y-o-y), totalling RM243.3 million, in 1HFY10. Even though net profit dropped 16% y-o-y to RM28.3 million, the results were admirable given the sharp drop in prices for steel products since hitting peak levels in mid-2008. To be sure, Pantech is no longer earning "abnormal" margins/profits due to record prices. But the underlying fundamentals of the business remain very much intact.

Sales for the manufacturing arm, the bulk of which were for export, fell sharply in 1HFY10 as a result of the global downturn. Demand in the US, one of its biggest markets, in particular was weak.

Positively, strong demand in the local market picked up the slack. The company's trading arm remains its biggest earnings generator, servicing, primarily, the domestic oil and gas sector as well as palm oil and refinery, petrochemical and oleo-chemicals industries.

The oil and gas sector is estimated to account for about 70% of Pantech's sales and will be the key driver for growth going forward.

Still very much a growing company

Pantech is committed to a growth strategy. Crude oil is expected to remain the primary fuel source for the world in the foreseeable future. Hence, exploration and development activities will continue to drive growth in the supporting industries.

The company is in the process of acquiring a piece of land totaling some 20 acres in the Pasir Gudang Industrial Area, Johor, for RM12.85 million. The land will be used for its new corporate office and warehouse, which will consolidate its southern region warehouse, office and supply chain.

Also on the drawing board are plans to build a new factory — to expand its current range of manufactured PFF products. Total capex for the buildings is estimated at RM50 million.

In addition to expanding its product range, Pantech is focused on tapping new export markets. Most recently, Pantech gained approval from the EU Commission to sell its products in the euro zone without attracting the hefty anti-dumping duties currently levied on many countries, including Malaysia.

It has already made promising inroads. The euro zone market, which is relatively protected, offers vast potential. At the same time, Pantech is working hard to further penetrate the Middle East markets, including oil-rich Saudi Arabia.

If all goes to plan, sales to these new markets will boost utilisation at the company's existing manufacturing plant, for a start. Utilisation has fallen to about 55% currently, due to weak global demand, especially in the US. Success will also diversify the company's geographical risks going forward.

Another of the company's main strategies is to move towards higher-value products, such as corrosion resistant PFF for the subsea segment of the oil and gas industry.

Low valuations offer upside gains
Pantech's shares are very attractively valued against our estimated growth for the company as well as the broader market's average valuations. This promises good capital gains potential as the stock is gradually rerated upwards.

The stock is now trading at only 6.7 times our estimated earnings of 15 sen per share for FY10. Earnings are forecast to grow a further 18% to RM66.5 million in FY11, underpinned by the global economic recovery.

Thus, Pantech's prevailing valuations compare favourably to its prospective growth rates as well as the average valuations for oil and gas stocks (estimated at about 10-12 times price-to-earnings or P/E) and the broader market (about 17-18 times P/E).

Pantech also pays higher-than-market average yields. Based on estimated dividends totalling three sen per share for the current financial year, shareholders will earn a fairly attractive net yield of 3%. Dividends are expected to grow further in line with Pantech's earnings expansion going forward.

Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.

http://www.theedgemalaysia.com/business-news/151411-pantech-strong-growth-prospects-on-cheap-valuations.html

Pantech: Still in the early phases of growth

Pantech: Still in the early phases of growth

Tags: InsiderAsia Pantech Group

Written by InsiderAsia
Tuesday, 04 August 2009 18:10



THE latest earnings results for Pantech Group (90.5 sen) for the first quarter (1Q) of its financial year (FY) ending February 2010 underlined the relative resilience in the company's business operations. Sales totalled RM123.9 million, down 11% quarter-on-quarter (q-o-q) but were up 9.3% year-on-year (y-o-y).

We expect sales and earnings to contract slightly for the full year, after adjusting for "abnormally high" steel prices, demand and margins in 2008. Sales and net profit are estimated to decline 4% and 10% to roughly RM490.3 million and RM53.8 million, respectively in FY10.

However, we are sanguine on Pantech's growth prospects beyond the current adjustment period. The company is enjoying continued stream of orders from customers and demand should gradually strengthen over the coming months. Sales are forecast to resume growth, by about 15%-17%, in FY11-FY12.

Potentially handsome capital gains
Based on its growth prospects, the stock appears to be trading on very attractive valuations. Pantech's shares are priced at only 5.9 and 5.0 times our estimated earnings for FY10-FY11, respectively.

Besides compelling valuations relative to its prospective growth rates, its shares are also trading well below the average price-to-earnings (P/E) for the oil & gas industry — estimated at about 10 times — as well as the broader market, which is currently priced above 15 times forward earnings.

In addition to potentially handsome capital gains, Pantech also rewards shareholders with fairly decent yields. Dividends are estimated to total 2.5 sen per share for the current financial year, which translate into a net yield of 2.9%.

Resilient local demand from oil & gas

As mentioned above, the company's sales held up fairly well in 1QFY10 despite the global downturn.

Sales under the trading arm, which caters primarily to the domestic oil & gas market, remain robust. The manufacturing arm, mainly for exports, did register some slowdown. We believe this was due, primarily, to customers drawing down on stocks. Demand should start to recover over the course of the next few months.

In fact, Pantech has also been unwinding some of its own inventory. Stocks were lower at RM174.9 million at end-May 2009, down from RM202.7 million at end-February. As a result, the company's gearing improved to 55% compared to 64% over the same period.

Oil prices unlikely to revisit lows

Crude oil prices have rebounded from the December 2008 lows of around US$35 (RM122.85) per barrel — rallying as high as US$73 per barrel in June. Although oil has since given back some of its recent gains on the back of growing concerns over the pace of the global economic recovery, we doubt prices will fall back to previous lows.

Market consensus suggests crude oil will trade between US$50 and US$70 per barrel in the near to medium term — and likely to head higher going forward as the global economic recovery gains traction. The long-term outlook for oil remains unequivocally bullish.

Currently, crude oil is hovering around US$70 per barrel — above the breakeven levels for most projects, including deepwater projects. Hence, we should see strong support for continued exploration and production activities in the sector.

Solid order book of around RM150 million

Indeed, Pantech continues to receive good flow of orders. The company typically maintains a running order book of around RM150 million, which will keep it busy for at least the next three months.

Pantech to pursue growth

Pantech's sales grew at an average compounded rate of 57% per annum over the past five year. We are confident that it will continue to grow at a double-digit pace in the foreseeable future.

The company has a wide clientele base as the largest one-stop centre for PFF (pipes, fittings and flow control products) solutions in the country. It carries in excess of 20,000 inventory items, thus providing customers timely and comprehensive solution for the transmission of all fluids and gases. Each and every one of the company's products carries proper certification, to meet the high benchmark standards for safety and quality required of the oil & gas industry.

Repeat orders for regular maintenance undertaken by its existing customers provide a steady stream of business and account for up to 40% of Pantech's annual sales.

Expanding product range and customer base

To further boost growth, the company is pursuing new markets and expanding its product range. It is an active participant in oil & gas exhibitions — local and overseas — to raise the company's profile and tap new markets.

It recently acquired two pieces of land — adjacent to its current manufacturing facility in Selangor and office in Johor — for future expansion purposes. In particular, Pantech intends to focus on niche market segments for customised products that carry higher profit margins.

In a positive development, Pantech has just won approval from the European Union (EU) commission to sell its products in the eurozone without attracting the hefty anti-dumping duties currently levied on many countries, including Malaysia. This exemption will give the company an upper hand in further widening its export markets and customer base.

Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.