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News

Ferret's Stock to Watch: SAVCOR GROUP LIMITED
08:46, Monday, 20 April 2009


ART TECHNOLOGY EXPANDS IN CHINA WITH A JOINT VENTURE


Sydney - Monday - April 20: (RWE Aust Business News)
*****************************


OVERVIEW
********


Savcor Group Limited (SAV), an industrial technology company has
expanded the operations of its ART business into China and India.
The company has completed the acquisition of the Savcor CHEC
business in China, a four-year joint venture between Savcor and China
Harbour Engineering Corporation.
The new company will be wholly owned by Savcor and trade as
Savcor Corrosion Technology.
SAVCOR ART is the advanced rehabilitation technology (ART)
providing solutions for the electrochemical protection and remediation of
steel and concrete structures.
The main customer sectors are the mining, industry and civil
structures.
Based in Guangzhou, the business already has a team of eight full
time employees with experience in sales, marketing and project
management.
Savcor has also commenced operations in India and has a start-up
team of six full time employees at new premises in Bangalore.
The business will trade as Savcor India Pvt Limited and is
expected to be fully operational by May 2009.
Savcor's managing director Mr Hannu Savisalo says the ART
business has the right teams in place in both markets and its immediate
focus will be on marketing Savcor's range of advanced rehabilitation and
structural monitoring technologies to potential customers in its core
sectors.
"There is significant potential for the ART business in China and
India," he said.
"China is a market we know very well, having operated a joint
venture there for over four years, completing a large number of projects,
so we already have a foundation from which to expand.
"We have been conservative with our entry into both markets with
the total investment being less than $2 million.
"Our strategy has been to invest in experienced people and we
will be pursuing a number of organic growth opportunities.
"We see a lot of opportunity for conditional assessment, cathodic
protection and structural monitoring in the building and essential
infrastructure markets - sectors where we have considerable
experience and a proven track record."
Mr Savisalo said that Savcor already has a good base from which
to market its products in international markets.
"As reported last month, the ART business has secured new
projects in Russia and Norway in energy and marine sectors so we are
already establishing a solid market presence," he added.
Mr Savisalo said that tendering activity in the ART business in
Australia remains active and the company is pursuing a number of
opportunities.
Tendering opportunities in China and India have also been
identified.


SHARE PRICE MOVEMENT
********************

Shares of Savcor Group on Friday eased 1c to 39c. Rolling high
for the half year was 58c and low 15c. Dividened is 3c a share while the
yield is a handy 7.69 per cent. Earnings per share is 7.04c and price
earnings ratio is 5.54. The company has 139.2 million shares on issue
with a market cap of $54.2 million.

Savcor in February reported a net profit of $10.05 million for
2008, up 29.4 per cent on 2007.
Revenue was up 87 per cent to $125.03m.
These results are the first full financial year results of the
restructured group and the post acquisiton results of the entities
acquired during the year.
Underlying EBITDA was $24.2 million against guidance of $26m.
The variation was primarily due to a significant drop in orders
for the FACE business in November and December 2008.
The ART business continues to perform strongly exceeding
prospectus revenue and earnings forecasts.
After paying a dividend of 3c per share in the first half which
equates to 42.6pc of the statutory net profit after tax for the year, the
company will not be paying a final dividend due to impairment write-downs
in the carrying value of certain assets in the Savcor Group accounts.
It is the company's intention to continue to maintain a dividend
payout ratio of between 40-50pc of net profit after tax.
On 3rd April 2008, the company announced an on market share
buy-back of a maximum 14,300,000 ordinary shares over 12 months.
As at 27 February 2009, a total of 1,937,575 ordinary shares have
been bought back.
The buy-back will continue for the foreseeable future with the
company taking the view that Savcor shares are significantly undervalued
at current levels.
The buy-back reflects the focus on improving the efficiency of
its capital structure.
Savcor FACE underlying revenue for the year was $40.8m (CY2007
pro-forma: $38.9m).
Savcor FACE's Guangzhou operations comprises the production of
camera modules and other EMI shielding components for mobile phones and
the new second factory for the production of decorative products.
As previously announced, the second decorative factory had been
impacted by some manufacturing issues.
Savcor ART underlying revenue was $83.4m (CY2007: $77.2m) and
normalised EBITDA was $18.1m, representing 21.7pc of revenue, (CY2007
$15.2m), well ahead of prospectus forecasts.
Mr Savisalo said there are a number of growth opportunities in
the ART business and this is a major focus for the company in the current
year.
Securing orders for several pending projects in the FACE business
is a priority.



BACKGROUND
**********
Savcor Group Limited (SAV) joined the Australian Stock Exchange
list on December 18, 2007.
It is an industrial technology company specialising in materials
technology with several applications in Advanced Rehabilitation
Technology (ART) and nanotechnology coatings used in applications such as
mobile phones.
Savcor Group Limited was incorporated on September 26, 2007.
It acquired several entities as a part of a restructure on
October 1, 2007.
For the purpose of consolidation, an acquired subsidiary,
Savcor Finn Pty Limited has been deemed the accounting acquirer.
Savcor's core customers are the leading companies and utilities
in the Australian mining, energy and infrastructure sectors (Savcor ART)
and the world's leading mobile phone handset manufacturers using its
ultra thin vacuum coating services (Savcor FACE).
Savcor employs 1500 people throughout the world.
ENDS



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