Business

Friday May 15, 2009

Orders down, but Pantech striving to improve things

By YVONNE TAN


PETALING JAYA: Pantech Group Holdings Bhd, which supplies products for the oil and gas industry, has seen a 20% to 30% drop in orders so far this year, but it is working towards reversing that trend as business conditions improve.

“Demand for our manufactured products, which deals mainly with overseas markets like the US, was affected by the slowdown but we think this is more because of stock clearing due to an influx of buying when product prices were high,” executive director Adrian Tan told StarBiz in a recent interview.

Demand should “normalise” by the third quarter, he said, adding that in contrast to its manufacturing division, “our trading arm which caters mainly to domestic demand is doing very well.”

Adrian Tan ... Since starting our business, there has not been a single year that we have not made money

Pantech also has another thing to look forward to – a supplier’s permit from Saudi oil giant Aramco to expand its presence in the Middle East.

“The expectations are that we would see a fall in orders for the whole year due to the current economic environment, we take it as a challenge and hope to prove them wrong,” Tan said.

Pantech is involved in trading, stocking and the manufacture of pipe fittings and flow control products. It serves both new oil and gas exploration activities as well as maintenance of oil rigs.

As much as 40% of the group’s turnover came from maintenance, Tan said. “We do not stop servicing our clients. That’s recurring income for us.”

Although the group does make and trade in equipment for other segments like palm oil and chemical, the oil and gas segment was something that the company had “hinged” on over the years due to consistent returns, Tan said. Almost 70% of turnover came from this segment last year. Tan counts the major oil and gas players in the country as his clients.

“Since starting our business, there has not been a single year that we have not made money. “

And the last financial year was an exceptional one for the company with demand and prices for steel products hitting record highs.

The company had an internal management target of a net profit of RM40mil for its financial year ended Feb 28, 2009, but it achieved a net profit of RM59.6mil.

This year, Tan said the company was targeting 15% growth over last year’s target of RM40mil, backed by its order book.

The company’s orderbook stands at RM208mil, with RM195mil worth of potential jobs at negotiation and tender stages. The jobs were a mixture of local and overseas contracts, he said.

Based on yesterday’s closing price of 73 sen a share, Pantech traded at a price/earnings ratio of 4.6 times its earnings last year.


PANTECH : [Stock Watch] [News]


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