Tuesday, Sep 14, 2004
The MARC-2ID/AID ratings are predicated by Oilcorp Berhad’s (Oilcorp) position as an integrated engineering, procurement and construction (EPC) services provider in various industries; strong historical profitability measure; and its low gearing position. The ratings, however, are moderated by the sustainability of its revenue and profits post-FY2005 given that Oilcorp’s on-going contracts are expected to be fully completed within FY2004 and FY2005. Potential new projects may require Oilcorp to gear up from its current low leverage position.
Oilcorp is an investment holding company with its subsidiaries providing integrated engineering services to the oil and gas, petrochemical, power generation, semi-conductor and other related industries. Contracts from these activities contributed to the upward trend in its revenue since FY2001; accompanied by double digit operating profit margins for three consecutive years. The group is also involved in property development, resort operation and property investment.
As of June 2004, the company’s on-going projects are valued at approximately RM182.0 million, half of which are expected to be completed within this year and the balance in 2005. So far, Oilcorp has tendered for projects amounting to RM493.0 million, of which 85.0% are oil and gas-related. Past experience indicates that the company’s minimum success rate for its tendered jobs was approximately 30.0%.
Oilcorp is in the final stages of completing the first phase of its new facilities comprising a fabrication yard, office building and workshops in Pulau Indah, Selangor and expected to start production in the fourth quarter of 2004. The new facilities shall enable Oilcorp to provide complete and comprehensive services to its customers, venture into oil and gas offshore construction and fabrication activities and diversify into marine related businesses like shipbuilding and repairs and construction of power barges.
MARC views Oilcorp’s venture into the fabrication business positively because it is generally longer term in nature and provides a steady stream of recurring income.
Oilcorp has been a relatively lowly geared company with average debt-to-equity ratio of 0.4x for the past four financial years. Upon full drawdown of the RM70.0 million facilities, pro-forma debt-to-equity ratio is expected to be 0.4x.
Oilcorp is an investment holding company with its subsidiaries providing integrated engineering services to the oil and gas, petrochemical, power generation, semi-conductor and other related industries. Contracts from these activities contributed to the upward trend in its revenue since FY2001; accompanied by double digit operating profit margins for three consecutive years. The group is also involved in property development, resort operation and property investment.
As of June 2004, the company’s on-going projects are valued at approximately RM182.0 million, half of which are expected to be completed within this year and the balance in 2005. So far, Oilcorp has tendered for projects amounting to RM493.0 million, of which 85.0% are oil and gas-related. Past experience indicates that the company’s minimum success rate for its tendered jobs was approximately 30.0%.
Oilcorp is in the final stages of completing the first phase of its new facilities comprising a fabrication yard, office building and workshops in Pulau Indah, Selangor and expected to start production in the fourth quarter of 2004. The new facilities shall enable Oilcorp to provide complete and comprehensive services to its customers, venture into oil and gas offshore construction and fabrication activities and diversify into marine related businesses like shipbuilding and repairs and construction of power barges.
MARC views Oilcorp’s venture into the fabrication business positively because it is generally longer term in nature and provides a steady stream of recurring income.
Oilcorp has been a relatively lowly geared company with average debt-to-equity ratio of 0.4x for the past four financial years. Upon full drawdown of the RM70.0 million facilities, pro-forma debt-to-equity ratio is expected to be 0.4x.