Influx of orders for AUSGROUP'S key customers
Mark Tan (left) at AusGroup's plant on the outskirts of Perth. Photo by Leong Chan TeikIf your key customers are going to do better, chances are you will ride the wave too.
That is the implicit message in UOB Kayhian’s note to clients on Mar 25 headlined “Order size received by key customers in 1Q08 three times larger than usual”.
UOB Kayhian analyst Mark Tan wrote that two of AusGroup’s key customers, Cameron (CAM) and FMC Technologies (FTI), have reported exceptionally large orders in 1Q08.
In January, FTI reported the award of a large subsea contract involving 49 subsea trees and other subsea hardware valued at an estimated US$980m.
Earlier this month, CAM reported the award of a contract involving 44 subsea trees and other subsea hardware with an initial value of approximately US$650m.
In terms of unit count, these two orders alone represent 19% of the subsea trees installed globally in 2007, wrote Mark.
These contracts are starting to include newer technologies, which reiterate “our view that demand for subsea systems will continue to be fueled not only by strong oil prices but also the technological shift in the production of oil and gas.”
At a recent price of 77 cents, AusGroup was trading at forecast 6.5x FY09 PE, which Mark described as “undemanding”. He maintained his “buy” recommendation with a target price of S$2.20.
AUSGROUP wins A$38 m of contracts in less than 2 weeks
This afternoon (Mar 26), AusGroup announced that it had secured a A$12 million contract for work on Montara, an offshore oil field north-west of Australia.
AusGroup will supply supervision and labour for the offshore installation of a production platform topside, jacket and offshore pipeline. It’s work in a new market sector for AusGroup.
The contract takes AusGroup’s order book to more than A$190 million. Together with the A$26 million of contracts announced last week, AusGroup has secured approximately A$38 million worth of work in less than 2 weeks.
Recent NextInsight story: AUSGROUP: Record half-time earnings of A$12.1 million
Share buyback proposal for CHINA SUNSINE
Sunsine produces chemicals which are necessary for producing rubber tyres. Photo by Victor NgCHINA SUNSINE is seeking shareholders' approval to buy back its shares.
The limit is 10% of the issued ordinary share capital of the company as at the date on which the resolution is to be passed.
The buyback mandate will give the directors the flexibility to purchase shares to enhance the company’s earnings per share. “Such flexibility will allow the Directors to better manage the Company’s capital structure and cash reserves,” said the company in an announcement on the SGX website.
The company has on 20 March 2008 received clearance from the Singapore Exchange for the issue of a circular on the buyback to shareholders.
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