FAST ENERGY HOLDINGS BERHAD (0084) – COMPANY UPDATES

As you can see, FAST had experienced quite a turbulence in terms of share price movement. However, the company had finally proved themselves by it’s recent more than satisfactory financial performance. Today, we shall dive deep into the quarterly performance of the company and undermine the true value of FAST.

Under Note A9 of the company, we could clearly see that there is a substantial increase in the bunkering, vessel chartering and petroleum trading business of the company. For the benefit of those who are new to FAST, the company was previously involved in the value chain of E&E business for manufacturing self-clinching fasteners, mould cleaning rubber sheets and LED epoxy encapsulant materials. Just recently, the company had ventured into the oil bunkering business due to the bright prospect of the industry with busy offshore activities as well as oil prices are on an uptrend.

You may refer to the above charts of tanker and dry bulk prices due to the booming demand. Nevertheless, let’s go back to the financial performance of the company.

As mentioned before, the oil bunkering business outperforms the old businesses by a great deal in terms of revenue, and reported a operating profit despite the headwinds.

What exactly do I mean by “headwinds”? If we refer to the acquisition completed by the company, particularly on the corporate exercise expenses as well as reduced interest income, the company had seen a small impact in the net profit. Else, I believe FAST is able to report a much better result in this quarter.

In terms of cash flow, the new business venture might have increased the trade receivables as well as inventories of the company. To me, this is understandable as the oil bunkering business is capital intensive and hoarding of inventories might be needed.

But based on my experience, this problem shouldn’t persist, and a turnaround of cash flow should be in soon.

Under Note B3, the company had a very clear business outlook for their oil bunkering sector. As such, the company’s performance should be gradually improving in the coming quarters. The rights issue of the company would also raise more fund to enhance the competitiveness of the company.

At this point, FAST is already close to touching the lowest point possible of 20.0 cents soon. Perhaps we will see a sharp rebound in Monday, coupled with the good performance of the company?