IEV Holdings

Kim Eng on 14 Mar 2012


Background: IEV Holdings offers a range of integrated engineering solutions that covers all aspects of a field life cycle, from the installation of new facilities and the repair and maintenance of existing assets to the eventual decommissioning of ageing structures. It also provides subsea products and services in the Asia Pacific and mobile natural gas to the industrial sectors in Indonesia and Vietnam.


Recent development: IEV held a briefing for its FY11 results last week. Net profit fell by 33.6% YoY to RM11.2m due mainly to lower GPM arising from the shift in its product mix and higher administrative and other operating expenses (predominantly professional fees and expenses related to its IPO last October). At the briefing, management also outlined several strategies to propel growth for IEV.




Transformation into niche turnkey constructor. In the offshore engineering division, IEV stands to benefit from the marginal field development sector. It has already secured the first platform reuse project in Malaysia that was announced on 19 December 2011 and which is expected to be completed by year-end. At the other end of the life cycle, decommissioning has gained momentum in several countries and IEV is also expected to benefit from this market segment. Two turnkey decommissioning projects in Malaysia, which were awarded to the group last year, are expected to be completed sometime in 1H12. As at the end of last month, the group’s orderbook amounted to about RM280m (or US$88m).


Integrated energy company. IEV is making inroads into the mobile natural gas segment, where we understand that it is working towards securing several stranded gas sources in Indonesia, as well as “Operation Cooperation” programme with Pertamina EP to secure feed gas supply for its future expansion needs. It is also expected to start the development of its new mobile natural gas supply chains to monetise stranded gas sources in 2Q12. Management will step up marketing efforts to increase CNG sales to existing customers while negotiating gas sales and purchase agreements with new customers.


Expectation is high. Management believes that IEV will make a quantum leap this year in view of strong growth potential in the engineering and energy sectors. The stock has more than tripled from its IPO price of $0.30, reflecting market optimism for its outlook. Based on Bloomberg estimates, the counter trades at about 7.4x FY12 PER. Key risk includes sound execution and implementation of its business plans.