LV Technology plans 3 overseas contracts

Hans-Jorgen Nielsen, founder and president, said in a press release yesterday that the new contracts would be made public after they were signed and due reporting made to the Stock Exchange of Thailand.

LV Technology has reported a net loss of Bt68.50 million for the third quarter, which represents an improvement of 37.6 per cent from the net loss of Bt109.8 million in the second quarter.

In its filing with the SET, the company said the third-quarter loss resulted from lower revenue since several large contracts were close to completion.

The company’s consolidated third-quarter revenue amounted to Bt441.43 million, which brought revenue for the first nine months to Bt2.03 billion, down 15 per cent from Bt2.39 billion in the corresponding period last year.

The smaller loss in the third quarter compared with the previous quarter has come as the result of more effective cost management and tighter control on project execution. The overall management streamlining is a crucial part of the new corporate strategy aimed at turning the company around from financial losses to profitability and longer-term growth, it said.

Further improvement in LV Technology’s financial position is likely to continue this quarter, and it believes this will lead to a turnaround next year to a profit of about Bt150 million.

The projected profit will likely comprise about Bt100 million from the company’s operations plus Bt50 million from subsidiaries now operating in various foreign countries.

Besides trying to secure new business, the company has been negotiating the sale of parts of its 49-per-cent stake in LNVT – a highly profitable joint-venture engineering consultancy in India that has been in operation since 2002 – to Chinese investors that have long sought to enter the booming cement market in India. Operating from its headquarters in Chennai, LNVT serves the fast-growing cement industry in southern India as well as neighbouring Sri Lanka and Nepal and generates annual revenue of about US$40 million to $50 million (Bt1.2 billion to Bt1.5 billion).

Expected to be concluded in the near future, the partial divestment of LNVT should generate substantial revenue that will contribute to LV Technology’s financial turnaround.

The company’s investments in India are just part of a string of mostly engineering consultancy, supply work 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, and Brazil, Honduras and the Dominican Republic in Latin America.

Besides tighter and more effective management, another key component of LV Technology’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 Monday to seek their endorsement for a capital increase covering the issuance of 397 million new shares of Bt1 par each.

Of the proposed total new issue, some 51 million shares will be allocated for a private placement and the remainder to existing shareholders at the ratio two new shares per three old shares at Bt1.25 each.

The approximately Bt500 million that will be raised from the new rights issue will be used to invest in the cement industry in Myanmar.

According to LV Technology’s latest filing with the SET on Wednesday, proceeds from the capital increase will be used to finance the procurement of equipment and machinery for one of Max Manufacturing Co’s cement plants with daily capacity of 1,500 tonnes plus other projects in Myanmar. An earlier plan to enter a joint venture with MMC has been postponed.