Singapore’s Big Loser for the Week: PEC Ltd

Credit: hobvias sudoneighm

PEC Ltd (SGX: IX2) declined by 5.4% since last Friday to end this week at S$0.435. With the Straits Times Index (SGX: ^STI) gaining 0.5% during the same time period, it makes PEC a big loser in the market this week.

With clients in Asia and in the Middle East, PEC is a “plant and terminal engineering specialist providing Project Works, Maintenance Services and other related services to the oil and gas, petrochemical, oil and chemical terminals, and pharmaceutical industries.”

The company recently announced that its subsidiary, EBT Engineering Pte Ltd, had completed the purchase of a leasehold property at 11 Neythal Road, Singapore from Best Safety-Glass Manufacturing (S) Pte Ltd. EBT Engineering, which was established some 20 years ago, is a corrosion protection service provider that’s involved mainly in the same sectors as its parent company.

The property will cost S$8.3 million, excluding taxes, and will be paid for by PEC using debt and internal resources. PEC shouldn’t have any financial difficulties financing the purchase because as of 31 December 2014, it was in a net cash position (total cash minus total borrowings) of around S$34 million.

The firm added that the reasons behind the purchase are two-fold:

  • To allow EBT to take on bigger projects and expand its scope of work; and
  • To provide accommodation for EBT’s workers, reducing “exposure to the shortage and rising costs of accommodation for its workers.” This is subject to regulatory approvals.

PEC is now trading at 12 times its historical earnings.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.