Bangkok--15 Nov--Mastermind Communication
Listed engineering consultancy L.V. Technology Public Company Limited (LVT) plans to conclude the signing of three new overseas contracts worth a combined one billion baht soon, which will bring total backlog to about 3.2 billion baht by year-end, company founder and president Hans Jorgen Nielsen stated today (Nov 15).
Mr Nielsen, who just returned to Bangkok from an overseas trip, said details of the new contracts will be made public after they are signed and due reporting is made to the Stock Exchange of Thailand (SET). He expected this to be completed within this year.
LVT has reported a 68.50 million baht loss for the third quarter ending September, which represents a 37.6% improvement from the 109.8 million baht loss in the second quarter. In its filing with the SET, the company stated that the Q3 loss resulted from lower revenue in this period since several large contracts were close to completion.
Consolidated revenue in the third quarter amounted to 441.43 million baht, which brought total revenue for the first nine months this year to 2.03 billion baht, or a small reduction from the 2.39 billion baht in the corresponding period last year.
The smaller loss in the third quarter compared to the previous quarter has come as the result of more effective costs management and tighter control on projects execution. The overall management streamlining is a crucial part of LVT’s new corporate strategy aimed at turning the company around from financial losses into profitability and longer-term growth.
Mr Nielsen added that further improvement in the company’s financial position is likely to continue in the last quarter and this will lead to more substantive results next year when he expected LVT will turn around to make a profit of about 150 million baht. The projected profit will likely comprise of about 100 million baht from LVT’s operations plus another 50 million baht from subsidiaries now operating in various foreign countries.
Aside from trying to secure new businesses, LVT has been negotiating the sales of parts of its 49% stake in LNVT, a highly profitable joint-venture engineering consultancy in India that has been in operation since 2002, to Chinese investors who have long sought to enter the booming cement markets in India. Operating from its headquarters in Chennai, LNVT serves the fast-growing cement industry in southern India as well as neighboring Sri Lanka and Nepal and generates annual revenue of about US$40-50 million.
Expected to be concluded in the near future, the partial divestment of LNVT is expected to generate a substantial amount of revenue which will contribute to the company’s financial turnaround.
LVT’s investments in India are just part of a string of mostly engineering consultancy, supply works and support to joint ventures in about 10 countries around the world. These include Malaysia and Myanmar in Asia, Saudi Arabia and Yemen in the Middle East, Mozambique in Africa as well as Brazil, Honduras and the Dominican Republic in Latin America.
Aside from tighter and more effective management, another key component of LVT’s latest corporate strategy is to put a new focus on growing company assets through new investments that can generate recurrent revenue into the longer-term future.
The company is convening an extraordinary shareholders meeting on November 19 to seek shareholders’ endorsement for a capital increase covering the issuance of 396,692,350 new sharers of one baht par each. Of the proposed total new issue, some 51 million shares will be allocated for a private placement while the remainder will be allocated to existing shareholders at the ratio of 3 old shares for 2 new shares at Baht 1.25 each.
The approximately 500 million baht that will be raised from the new rights issue will be used to invest in the cement industry in Myanmar.
According to LVT’s latest filing with the SET on November 14, proceeds from the capital increase will be used to finance the procurement of equipment and machinery for one of Max Manufacturing Co., Ltd (MMC)’s cement plants with 1,500 tons-per-day capacity plus other projects in Myanmar while an earlier plan to enter into a joint venture with MMC has now been postponed.