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From IEV Holdings' point of view, it has a product that has the potential to be a big winner -- on a global scale. |
IEV's product is installed on about 500 platforms, largely in Asia. These were newly-constructed platforms which IEV successfully supplied its product to.
IEV dealt directly with EPCIC contractors, which number a handful only, who fabricate and install offshore platforms.
In recent times, new platforms under construction are few and far between as the oil & gas downturn takes its toll on oil exploration activities.
So, IEV is switching its focus to the brownfield market, ie existing platforms: There are more than 10,000 of them worldwide, of which more than 2,000 are in Asia.
IEV now seeks to create a worldwide distribution network to sell the MGP-i solution to over 400 owners of the existing 10,000-plus platforms.
 "We had a technical breakthrough after one of our clients in China required us to develop the product to withstand the impact of ice sheets in winter. Through R&D, we incorporated new features into our product and we could then give a warranty on the durability of our product even when it operates in super typhoon conditions." -- Christopher Do, President & CEO of IEV Holdings |
IEV has ongoing commercial contracts for the MGP-i as well as product trials with a number of potential clients in new territories.
The product -- with a 24-month warranty -- has a target market which far exceeds US$1 billion. The figure balloons when you look beyond the oil & gas platforms to jetties and offshore windfarms.
What's the big deal about its product? According to IEV:
1. MGP-i has been granted patents by the US and China. More countries are expected to follow suit: Malaysia, Indonesia, Vietnam, India and the UK.
2. Selling for a few hundred thousand US$ per platform, the MGP-i costs operators -- who currently practice periodic cleaning -- far less than engaging divers every year to clear the marine growth, as required by platform insurers.
IEV President and CEO Christopher Do says: "The MGP-i is not only highly cost-effective but also eliminates or reduces the scope of cleaning by divers. Without marine growth in the wave zone, operators can afford to operate their structures with additional growth thickness below the wave."
As the MPG-i haspatent protection, copy-cat products are deterred. More significantly, operators are not likely to risk the insurance coverage and structural integrity of their platforms by buying copy-cat products (if any were to emerge) for relatively small savings.
3. The far bigger sell is: MPG-i increases the life span of oil platforms, and increases their structural capacity (ie, more equipment can be placed on the platforms). Marine growth, if left unchecked, will increase environmental loads and reduce the lifespan of platforms.
IEV is engaging consultants to provide expert reports on the extent that the MGP-i can contribute to extending the life of platforms as well as increase their loading capacity. As platforms are high-value assets, a multi-year extension of their lifespan would translate into massive economic value for the owners.
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Stock price |
7.5 c |
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52-week range |
4.2 – 10.5 cts |
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PE (ttm) |
-- |
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Market cap |
S$22 m |
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Shares outstanding |
283.6 m |
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Dividend yield |
-- |
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Year-to-date return |
17% |
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Source: Bloomberg |
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4. In 2014, the technology behind MGP-i was recognised by the American Petroleum Industry (which describes itself as "a cornerstone in establishing and maintaining standards for the worldwide oil and natural gas industry"). The API standard is a printed edition and must be purchased. Click for the API 2014 edition.
To prepare for higher sales, IEV is is working on its expansion plan and relocation of its Malaysian factory later this year, or early next year, to a 40,000 sq m site, which is about 4X larger than the existing one.
IEV says its heightened emphasis on the business potential of the MGP-i is part of a larger transformation of its business, and an integral component of its suite of disruptive technologies to help drive operating cost down for its customers..
IEV has several other business segments, whose developments -- past and planned -- are beyond the scope of this article. Check out its 2016 annual report for more information.
IEV reported revenue of RM370.3 million for FY2016 (+232% y-o-y) and net loss of RM33.6 m on a significant impairment in a particular business segment (FY2015: net profit of RM12.6 million).
For details of its financial results, see its press release.
And IEV's website has lots more info on its MGP-i.
