Rotary Engineering net profit rises to S$5.1m in 2Q13

Propelled by Asian contract win streak.

Mainboard-listed EPC and maintenance services provider Rotary Engineering Limited (Rotary) reported a rise in net profit after tax attributable to shareholders amounting to S$5.1 million for the second quarter of financial year ended 30 June 2013 (2Q13) on revenue of S$126.2 million. This translates to earnings per share of 0.9 Singapore cent.

The Group has just inked approximately S$100 million worth of contracts in Singapore and Thailand. In Singapore, Rotary secured an EPC contract from an oil major for its new lube oil blending plant (LOBP) at Tuas South, Singapore. The contract is for the EPC of an entire state-of-the-art LOBP with a production capacity of 300,000 tons per year. Work on the project will commence shortly and is expected to be completed in 2015. The new LOBP will be located adjacent to the shared lubricant storage facility at Tuas South.

Mr Chia Kim Piow, Managing Director and Chairman said: “We demonstrated our engineering capabilities in working with international experts for this 300,000 ton per annum plant, one of the biggest and state-of-the-art lubricant blending plants in the world”.

In Thailand, the Group won a contract for the IRPC Public Company’s Upstream Hygiene and Value Added (UHV) project in Rayong, involving the engineering and construction of 7 spherical tanks, and the construction of 19 atmospheric tanks. Work has commenced and is expected to be completed by the end of 2014. The UHV Plant will process and refine crude oil into gasoline, kerosene and light oil; and use the atmospheric residue to manufacture polypropylene, diesel, ethylene and naphtha.

Rotary’s order book now stands at S$1.0 billion. Commenting on the strong order book, Mr Chia said: “I am pleased to share that our order book has crossed the billion dollar mark. The size and nature of the projects are similar to those which Rotary had successfully delivered. I am confident that we are able to execute these projects safely, on time, on budget and with a high standard of quality. With over 60% of the projects on hand in Singapore, we will have more opportunities to train our next generation of project managers and engineers.”

As at 30 June 2013, Rotary had S$100.9 million in net assets and a net asset value per share of 34.3 Singapore cents. Cash and bank balances were S$164.7 million, with total loans and borrowings at S$74.8 million. For its outlook, the company views demand for oil and gas infrastructure engineering as continuing to be strong.

"This bodes well for the Group as it consistently develops its business through direct negotiations and bidding for projects in ASEAN and Gulf Cooperation Council countries. The Group remained resilient amidst the global economic uncertainties and keen competition," it said.

The Group had also established a representative office recently in the Sultanate of Oman to explore business opportunities there.

Underpinned by its strong order book, the Group said it is cautiously optimistic on its business prospects in the next 12 months.