Minetech Resources Bhd
Minetech Resources Bhd started as a drilling and blasting service in 1977, and has since become one of Malaysia’s largest aggregate mining companies with revenue of over RM200 million, although it has a small market capitalisation of RM49.9 million.

Minetech currently operates a network of nine quarries, from which aggregates are produced. The company has expanded into synergistic and related products such as the production of bituminous products and premix products that cater largely for earthworks and road construction. It also has a civil engineering and construction arm, as well as a property development unit in Perak.

The company’s revenue has been moving up consistently over the past five years, rising from RM126.4 million in 2009 to RM201.4 million in 2013. However, its profitability track record has been patchy, with the company posting net losses in three of the last five years. In 2012 and 2013, it posted net loss of RM9.2 million and RM8.3 million, respectively.

Even in years when the company was profitable, net profit was small at only RM2.2 million in 2010 and RM1.2 million in 2011.

It is worth noting that last year’s losses were largely due to write-offs as the company appeared to have undertaken a balance sheet clean up exercise. Impairment losses by subsidiaries and losses on investment in subsidiaries totaled RM7.8 million while a further RM4.8 million was written-off for obsolete inventories and aging fixed assets.

However, 1H2014 saw revenue declining 23.5% to RM76.0 million, with a net loss of RM0.6 million compared with net profit of RM1.6 million a year ago. Minetech has a low net gearing of 8.6% and has not paid any dividends for the past five years. The stock is currently trading at 1.03 times its net asset value of 14.6 sen as at 30 June 2014.

This article first appeared in The Edge Financial Daily, on October 16, 2014.