Metronic Global- The Albatross RPT

Metronic is in poor health these days. The Anhui BOT project in China is gone and as such, expected losses will rise and NTA will go down. However, the silver lining is compensation which will help in operating expenses.

On 25th June 2010, Metronic Global Bhd has also informed Bursa that  a huge amount  is due to it from a related party via a transaction that took place more than three years ago. They have been trying to recover the debt.

The related party transactions (RPT) consist of  receivables amounted to RM46.85mil stemming from sub-contract work completed for a “related party that is a main contractor on certain public sector projects for the government.”

Of the total amount, the related party was supposed to pay RM36.3mil to the company more than three years ago.

To recover the dues, Metronic has obtained consent from the contractor to proceed with the certification and collection directly from the Health Ministry, Finance Ministry (MoF) and Public Works Department (JKR). “The claim is pending certification by JKR before submitting to the MoF for approval,” it said.

While the company will pursue the receivables directly from the Government, it also said it may commence legal action to ensure full payment.

The firm reported a turnover of RM60mil but made a loss of RM2mil for the year ended Dec 31, 2009. It made a loss of RM5.3mil on RM9.56mil revenue in the latest quarter ended March 31. That was the group’s biggest quarterly loss since it went public in 2004.

Once the receivables are realised either through statutory directives or through the courts, then Metronic will again have a war-chest to play with. That will reflect in the revision of the price of Metronic shares which has been in the doldrums of 5-6 sen currently.

So, for those who still think Metronic can change its fortune, just stand on the sideline and watch the counter.

Caveat Emptor: Please do not buy or sell shares of Metronic based on this article.