April and May is a busy period for many listed companies, announcing their 1Q results. I will try my best to cover companies important at least to me. One of them is Vallianz as follows.

Results here
  • Record
    revenue increase of 10x vs 2013 to USD27.7m.
  • Mainly
    (89%) due to charter revenue. No one time significant gain. 
  • PAT increase 420% to USD5.5m vs 2013. Net profit margin is 19.7%. Improvement
    mainly from subsidiary, Rawabi in Saudi. 
  • Huge
    admin expenses and interest cost surge, but in line with growth 
  • Net cash used in operating activities was USD6m compared
    to USD628k a year ago. 
  • Net
    debt is 379 million [LT (323m)+ST(73m) debt minus cash(17m)]
  • Net Debt to equity ratio of 295%highest geared
    offshore service company
     listed in SGX
  • Over
    the quarter, the company raised more than USD170million through new loans,
    issuing of new shares and redeemable convertible capital securities.

Outlook
  • Optimistic
    outlook in the oil and gas industry. 
  • Order
    book ~US$442.0 million.
  • The
    capital raised is mainly used to acquire more vessels for its business. 
  • Bidding
    for projects amounting to ~US$1.2 billion in Asia, Middle East, and Latin
    America. 
  • Entered
    into a strategic collaborative agreement with one of China’s first class
    shipyard to secure long term vessel charter for up to 200 vessels.
  • Has
    young and best-in-class fleet of 28 offshore support vessels and intends to
    boost its vessel fleet to at least 50 vessels by 2016.
Comments

High
risk high return. In similar fashion but conversely, high risk and high gearing can mean high
damage, especially in times of crisis.

Vallianz
is one of the first few oil and gas stocks I owned with an average buy price of
single digit cents. I know the company well and was once my biggest
holdings. After the high debt undertaken recently, I decided to divest, to retrieve some of
my initial invested capital leaving behind mostly profits.

From
the outlook and fundamentals,
prospect of Vallianz is still extremely bright. It also has backing from Swiber and Rawabi.  Swiber possessed good track record of
turning one of its earlier subsidiaries Kruez Subsea into a double bagger. In my
opinion, the management of Vallianz is also at the right age to accelerate
growth of the company coupled with integrity, drive and hard work.

In a
nutshell,
be conservative and monitor the industry and company closely since
this is high growth but cyclical stock. It is better to be safe than sorry!
Nevertheless, unless unprecedented catastrophic events take place, I still give
two thumbs up for this company!

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One thought on “Vallianz Holdings – 1Q Results

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