Favelle Favco Bhd ... Oct09

Currently it is bidding for RM500mil to RM600mil worth of projects both locally and overseas. Favelle Favco is bidding to manufacture customised cranes for industries, such as offshore oil and gas as well as construction.

It has also been pre-qualified to tender for the Petrobras project in Brazil, but the amount and its chances of winning are unknown.

Favelle Favco’s order book currently stands at RM500mil to RM600mil, mainly from the oil and gas, and construction sectors, which should keep the company busy till 2010.

Up to 2008, crane fabrication contributed an average of 83% to the company’s total revenue, while spare parts accounted for 10% and the rest from maintenance and rental of crane parts.

Favelle Favco was also placing more emphasis on its smaller business segment of services of cranes and supply of parts due to demand.

Concerns are on the company’s thin margins due to higher costs. It only enjoyed a gross margin of 10% on the revenue generated from making cranes as the cost of fabricating cranes made up a major part of its expenses.

As at Dec 31, 2008, the company had net debts amounting to RM102.1mil.