Loxley - OSK

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RHB Research 06 Mar 2013 FINANCIALS ICT & projects the biggest revenue contributor. In FY12, Loxley’s ICT & projects segment contributed the lion’s share to the group’s topline, accounting for about 67% of total revenue. This was followed by its trading and services segments which contributed about 27% and 6% of the total revenue respectively. Revenue contribution from ICT & projects has been on an uptrend over the last few years, up from 50% of total revenue in FY08 to 67% last year, owing to the higher backlog as the company secured more contracts. While the ICT & projects segment recorded a 8.8% y-o-y growth in FY12, the group’s total revenue was relatively unchanged y-o-y due to the 16.1% y-o-y contraction in revenue from its trading business, partly due to the impact from the devastating floods in late 2011. Figure 4: FY12 revenue breakdown Source: Loxley Figure 5: Historical breakdown of revenue by segment since 2008 Source: Loxley JVs the biggest bottomline contributor in FY12. On the whole, Loxley’s subsidiaries did not contribute any EBIT for FY12. However, according the notes to its financial statements, there are slim margins of around 3% for its key ICT & projects business, as well as for its services segment. Its trading division appeared to be in the red, partly due to the impact from the post-flood crisis coupled with the extremely thin margins characteristic of this business. As such, all of Loxley’s net profit in FY12 came from its JV and associates business, driven by strong earnings growth from BP Castrol, BlueScope and L-Solar 1. In FY12, Loxley’s JV and associate companies generated a total net profit of THB2.2bn, of which THB702m was earnings from its equities. RHB Research | See important disclosures at the end of this report A comprehensive range of market research reports by award-winning economists and analysts are exclusively available for download from www.rhbinvest.com 6 Powered by Enhanced Datasystems’ EFA Platform
RHB Research 06 Mar 2013 Figure 6: Total and equity profit from Loxley’s JV and associate companies in FY12 Source: Loxley Figure 7: Equity profit structure from Loxley’s JV and associate companies in FY12 Source: Loxley Decent balance sheet with room for improvement. At a D/E ratio of 1.8x as at end-FY12, Loxley’s balance sheet was relatively highly-geared due to its high borrowings to finance its expansion and investments. Nevertheless we think the balance is decent enough, and has some scope for further improvement as the company explores other avenues to raise capital for future expansion and investments, such as through the upcoming public offering (PO) of 165m new shares which is expected to raise about THB1bn. The proceeds from the PO will be utilized for additional project investments both locally and abroad, as well as to fund working capital. Figure 8: Loxley’s consolidated balance sheet for FY12 Source: Loxley RHB Research | See important disclosures at the end of this report A comprehensive range of market research reports by award-winning economists and analysts are exclusively available for download from www.rhbinvest.com 7 Powered by Enhanced Datasystems’ EFA Platform
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