Boilermech: Good But Expensive

Boilermech FY14Q2 Financial Result

BOILERM	FY14Q2	FY14Q1	FY13Q4	FY13Q3	FY13Q2	FY13Q1
Revenue	55.3	51.5	34.6	44.0	45.2	42.0
PBT	9.6	8.5	7.6	8.1	7.2	7.4
PBT%	17.4	16.5	22.0	18.4	15.9	17.6
PAT	7.2	6.3	6.8	4.0	5.2	5.4
Total Equity	85.5	84.3	78.7	71.6	70.4	64.0
Total Assets	207.2	205.8	177.0	157.7	157.3	152.8
T/Receivables	51.2	59.3	61.7	49.1	45.5	43.7
Inventories	30.4	21.6	19.3	20.1	16.9	18.1
Cash	7.3	26.2	13.1	8.4	8.4	5.8
Liq Inv	59.6	40.7	27.0	15.9	25.8	43.4
Total Liab	121.6	121.5	98.3	85.9	86.9	88.8
T/Payables	34.6	34.7	28.6	26.5	30.0	28.7
ST Borrow	0.4	0.4	0.4	0.4	0.4	0.4
LT Borrow	0.5	0.6	0.7	0.8	0.9	1.0
Net CF	26.8	26.8	1.9	-14.0	-4.0	11.1
Operation	33.6	28.2	28.5	12.4	17.6	11.3
Investment	-1.4	-1.3	-22.4	-22.3	-21.4	-0.1
Financing	-5.4	-0.1	-4.2	-4.2	-0.2	-0.1
EPS	2.77	2.46	2.62	2.44	2.03	2.11
NAS	0.33	0.33	0.31	0.28	0.27	0.25
D/E Ratio	Net C	Net C	Net C	Net C	Net C	Net C

Boilermech latest result is good. Its revenue increases 7.4% from RM51.5mil to RM 55.3mil QoQ. Net profit rises 14.3% QoQ to RM7.2mil due to better margin in current quarter.

For 1HFY14, its revenue and net profit increase by 22% and 26% compared to corresponding period of last FY.

The better results are all due to better business activity in the company.

I think Boilermech will have no problem to produce RM30mil net profit for the whole FY2014. Base on the current total shares of 258mil before the proposed bonus issue, my own target price for Boilermech is only RM1.74 (PE ratio of 15x).

Apparently at current share price of RM2.44, even though it has proposed bonus issue and transfer to main board, I will not touch it unless it goes down below RM1.50, which is highly unlikely...

Definitely Over-boiled

Boilermech is in my stock watch list since June 2013. This company is definitely worth investing in for long term. 

I discovered it too late.

In June13, its share price was hovering around RM1.40. PE ratio was about 15x. I thought it has over-boiled or overpriced. I hoped the price will drop to at least RM1.20 region.

Apparently I am wrong, its share price surged to RM2.50 in 5 months time after it announced its proposed bonus issue and transfer to main board last week.

       Boilermech

Frankly, I do not expect Boilermech's share price to advance at such a pace. I think it will be slow and steady over the years.

At RM2.50, its PE ratio will be 27x, which is out of mind.

I did not buy at RM1.40 & Rm1.80 level. Never at any price more than RM1.40.

In summary, Boilermech is one of the cows that never comes home.

Boilerm: Has It Over-boiled?

If you missed the slow and steady growth of QL Resources, now you might have a second chance.

As QL's associate company acquired in 2010, Boilermech has been listed in the ACE market in May 2011 with an IPO price of just 33sen. Boilermech's largest shareholder is QL Green Resources, who owns about 39% of Boilermech. Boilermech's chairman Chia Song Kun is also QL's managing director, who is the soul in QL.

So far, Boilermech's revenue & net profit continue to grow from 2009 to 2013 without interruption, and its share price consistently heads north, just like what QL has achieved. For FY13 ended Mac 2013, it recorded a revenue and net profit of RM165.8mil & RM23.7mil respectively, up 10.8% & 23.1% compared to FY2012 despite its FY2013 has only 11 months due to change of financial year end. With this kind of result, it has certainly fulfilled the criteria to transfer to main board and it is just a matter of time that this news will be announced.

Boilermech involves in the design, manufacturing and service of biomass boilers, mainly in the palm oil milling industry. Does it still have room to grow from here?

        Biomass: greener & cheaper energy

To expand its capacity, Boilermech has recently completed the acquisition of a factory nearby its existing factory in Subang. Its production capacity is expected to rise from 5 boilers/mth to at least 8/mth by August 2013, and 10/mth by year end 2013. With the increase in capacity, it is believed that Boilermech can continue to grow for the next one year or two. It may also expand its reach to other countries in the future besides Malaysia and Indonesia.

Despite a small cap growth stock, Boilermech pays dividend too. It has just announced dividend of 2sen per share for FY2013, which represent a payout of 21.8% from FY2013 net profit. The dividend payout for FY2012 stands at 20%. However, due to the escalating share price at RM1.60 currently, the dividend yield is just a mere 1.25%. But if you started to buy Boilermech's share at 79sen at the beginning of its FY2013 (April 2012), then the yield will be 2.5%.

       Boilermech's main office

Today Boilermech's share price surge again to RM1.67, PE ratio 18.2 from FY2013 earning, and its share price has increased 380% from its IPO just a little more than 2 years ago, is it still worth to collect? I wish to, but money not enough...