Minetech back on the radar?

by **Cals** Mon 13 Jan 2014, 02:12

Published: Saturday January 11, 2014 MYT 12:00:00 AM
Updated: Saturday January 11, 2014 MYT 7:57:29 AM
Minetech back on the radar?
BY YVONNE TAN
LONG-FORGOTTEN Minetech Resources Bhd has been getting some attention of late.
Over the past few weeks, its trading volume has swelled several times over as with its share price.
In the past one week alone, the stock has gone up 13.5% against the broader market which is down by 0.16% in the same period.
For starters, individuals who have been tracking this company will know that certain shareholding changes have taken place.
According to filings with Bursa Malaysia, on Dec 30, Datuk Lye Ek Seang, also a former director of Ho Hup Construction Company Bhd, ceased to be a substantial shareholder of the firm together with one Lau Chee Meng and HSBC Holdings plc.
Businessman Chin Boon Long emerged as a substantial shareholder in the firm, buying a 6.91% stake on Jan 6 from the open market.
According to Bloomberg, the largest shareholder in Minetech currently is Sen Choy, who has a 26.76% stake.
This is followed by Low Choon Lan, who holds a 8.58% stake.
Jobs-wise, this small cap firm which eked out a small net profit of RM346,000 in its latest quarter said on Dec 31 that it had proposed to enter into a joint-venture (JV) agreement with Perak-based Pantai Quarry Sdn Bhd for the development of quarry land, undertaking of quarry operations, including downstream and the undertaking of sales and marketing of quarry products.
Minetech, via its subsidiary, will hold 51% in this proposed JV.
According to its announcement to Bursa, the proposed JV is in line with Minetech’s strategy of “enhancing its core quarry operations business by turning around this segment of business for financial year ending 2014”.
The venture, it adds, is expected to contribute positively to the future earnings of the group and enhance shareholders’ value in the long term.
Before this, it got a contract from Gamuda Engineering Sdn Bhd worth RM25.1mil in the middle of last year to construct and complete the underground excavation works and rock strengthening for the Maluri Station and Crossover under the “Projek Mass Rapid Transit Lembah Kelang: Jajaran Sungai Buloh-Kajang Underground Works Package”.
Notably, these jobs are only two of Minetech’s major contracts in at least a couple of years.
However, sources now say the company’s job pipeline could possibly get a lift soon as it may obtain a major contract involving the construction of a casino in Cambodia.
According to one source, Minetech could be teaming up with a China-based casino operator for this purpose.
The company is likely to be the main contractor for this project, he says owing to its “good business relationship” with the casino operator.
Minetech declined comment when approached for this article.
The company started life as a drilling and blasting service provider in the late 1970s and according to its corporate website, has since developed into one of the largest aggregate mining business in Malaysia.
It operates a network of nine quarries around Malaysia and overseas.
The aggregates that it produces at these quarries are used as building materials for the construction business.
With over 30 years of industry experience, the company has diversified into being a specialised civil engineering works provider including drill and blast services, rock crushing, earthworks, road pavement projects and building construction.
Recall, Minetech was first listed on Bursa as a second boarder way back in July 2005 but suffice to say it’s not been a smooth journey since.
Plagued by profit margin erosion since as a result of higher operational costs, the company which had inked earlier agreements which involved fixed selling prices to buyers of its aggregates had been hit badly as it could not pass on its higher costs to these parties.
As the company continues to seek to pull itself of its doldrums and perhaps work on enhancing its building construction segment, the jury is still out on whether the recent interest in the company is justified or will the company, which was once on the radar of analysts at the very beginning of its listed life, continue to disappoint investors with its poor financials.