Velosi Share Discussion Threads

[stemis] 24/1/2007 08:04

Yes Jonwig, a very positive move. Any idea how financially significant it is?

I suspect Velosi is suffering a bit at the moment from the fall out of reduced oil prices. I'll probably give it another look in the new week or so.

[jonwig] 24/1/2007 07:28

Would seem to be a significant contract, and largely European operations, maybe?
There was always the fear that their business was too much in politically suspect areas:

The Velosi Group ('Velosi'), a provider of quality assurance and quality control
services to a number of major national and multinational oil and gas companies,
is pleased to announce that it has been awarded the Shell EP Europe Inspection
and Expediting contract for a duration of three years.

[jonwig] 17/1/2007 08:46

11 positions at Velosi LLC (Oman):



Expansion? Or - ??? - staff exodus.

The Oman firm is a 50%-owned associate.

[jonwig] 22/12/2006 13:27

The Company was yesterday notified that, following the purchase of 500,000
ordinary shares of $0.02 each in the Company ('Ordinary Shares') on 18 December
2006 at 97 pence per share, Velosi Malaysia is interested in 6,736,955 Ordinary
Shares representing approximately 17.66 per cent. of the issued share capital of
the Company.

Dr Nabil Abdul Jalil holds an option to acquire 26.02 per cent. of Velosi
Malaysia. The ultimate shareholders of Velosi Malaysia are Mohammed Ashari bin
Abas (68 per cent.) and Mohammed Jai bin Suboh (32 per cent).

[jonwig] 22/12/2006 11:26

Velosi busy in UK, to roll out procedures worldwide:

[jonwig] 15/12/2006 08:38

Two interesting acquisitions (51% stakes) announced:

Steel Test (Pty) Limited, a company incorporated in South Africa, for an aggregate consideration of R12.75 million (approximately £0.93 million). Steel Test carries out tubular inspection, which is extensively required for maintaining plant and equipment where piping systems are used to convey flow or for heat exchange.

Plant Design Engineers Sdn Bhd, based in Malaysia, for an initial consideration of RM 4.0 million (approximately £0.57 million). PDE provides state-of-the-art 3D laser scanning imaging of oil and gas plants, thereby creating as-built, virtual models from which maintenance and modification plans can be accurately developed.

[hard work] 07/12/2006 21:13

Source is reliable - they sent me this note to my email and I participated in the IPO through them

[jonwig] 07/12/2006 18:41

Not a site I've come across before, so can't vouch for its quality.
here's what they have to say today about VELO:

Velosi Group, an oil services new issue in which we participated in August issued a very positive trading update today.

It stated that it expected results for the year to 31 December 2006 to be ahead of expectations with strong demand for its services in Nigeria, the US and Qatar where contracts won during the first half of the year have shown significant growth.

As a result the house broker has increased their earnings forecasts for this year by c10% with a similar increase for 2007. With strong demand and a significant tender pipeline they see room for further upgrades in 2007 and have set a 12 month target price of 130p.

It's always a bit tricky when one only gets the opinion of the house broker but I am inclined to support them here.

Given the underlying strength of the sector in which they operate and the business itself (especially relative to a lot of the rubbish you see on AIM) we have been surprised at the weakness in the share price since floating at 90p.

The interim results to 30th June, announced in September, were also very encouraging with a doubling of pre-tax profit, a more than 100% increase in sales and a very confident Chairman's statement.

The shares have risen c16% today standing at c97p but surely there should be a lot more to come.



BTW, if you read this link after today, it probably will have gone, you'll need to search.

[nurdin] 07/12/2006 11:43

Bought in today..thanks to BritishB...certainly look pretty cheap :o)

[escondido] 07/12/2006 10:53

Nice t/s. Missed the boat this a.m. Price now almost at the placing. One definately to watch.

[jonwig] 07/12/2006 08:42

Very positive trading update for current year to 31 Dec.
PBT marginally ahead of expectations, earnings ahead.



Recent selling not sinister, then.

[jonwig] 30/11/2006 10:21

Sells of 5,000 shares at a time (sometimes multiples: 10,000 or 15,000) very noticeable over the past month.
Would be encouraging to think this was just one holder unloading, rather than 'insider' selling.

[jonwig] 14/10/2006 11:43

A quick summary of main competitors.

3.3.2. Competition
The Directors consider that the Group's global competitors comprise, inter alia, international quality surveillance and certification companies, including Moody International Group, Lloyd's Register Group, AIB Vincotte International (Belgium), Socie´te´ Ge´ne´rale de Surveillance (Switzerland), Bureau Veritas
(France) and TUV (Germany), each of which operates global business units offering a number of the services also provided by the Group.

• Moody International.

Private company, est 1911, offices in 60 countries (incl. Nigeria!). Not connected with 'Moodys' credit ref, etc. company. More construction, engineering and food connections, O&G not prominent. No financials for comparison.



• Lloyd's Register Group.

Appears to be Ltd by Guarantee, or similar - non-profit. Again no financials. Global reach. In addition to the obvious shipping certification business (the one VELO is trying to break into) there's some mention of O&G.



• AIB Vincotte International (Belgium).

Again seems to be a private company. Inspection of elevators, engineering, generation and electrical installations. Again O&G doesn't feature prominently in their list of services.



• Societe Generale de Surveillance (Switzerland)

"SGS is the world's leading inpsection, verification, testing and certification company". They say they are the market leader in the Oil, Gas & Chemicals areas. Appear to cover full range of services across all sectors - unsurprising looking at their size.
Quoted in Switzerland. Shows good eps growth; operating margin 15%.
2005 FY T/O £1.4bn, eps £21, share price currently £530. P/E approx 25×. MCap £4bn. [Figures converted from CHF to GBP.]



• Bureau Veritas (France)

Prominent in full service range, incl. shipping, transport, power generation, O&G.
2005 T/O €1,647M (£1.1bn). 2005 Annual Report contains very few 'numbers' and no accounts, and I can't find a stock quote, so it may be private.



• TUV (Germany)

T/O (2005) approx €850m (£600m) and operating margin 5.2%. Appears to be a private company. Covers full range of services, but shipping and O&G don't seem to be prominent. The 2005 annual report is short on financials but long on pretentious nonsense, typical of a lot of modern German companies! Can be downloaded from the website. Worth a quick look just for the arty stuff!

[hedgehunter] 12/10/2006 02:00

Im thinking of having a few more Jon before others catch on.

[jonwig] 11/10/2006 18:32

I've been away for a couple of days - nice to see some good posts (from known good posters) in the meantime: thanks.

The company's main competitors are mentioned in the prospectus - I'll try to get a handle on them when I've readjusted to the business of making money rather than spending it. (I'm doing the latter pretty well at the mo...)

[hedgehunter] 11/10/2006 11:42

Reading the prospectus and it makes for good reading.

[hedgehunter] 11/10/2006 00:53

and..........

Buy Velosi at 89.5p

A Tip from the award winning
Aim and OFEX Newsletter
The Velosi Group, founded in 1982, provides quality control services to the oil and gas industry. It supports many leading names including BP, Shell, ExxonMobil and Chevron. It has ten operational centres spanning five continents, with regional offices in Reading and Abu Dhabi . Until now the business has been self-funded but in light of greater demand it needs additional reserves to beef up its contractual capacity. The shares began trading on AIM on 21 August at 90p, following a placing of 10 million pounds.

Velosi was created by a nuclear physicist, Nabil Jalil, to provide conventional non-destructive testing to small and medium sized businesses. It soon extended into the provision of quality assurance and quality control services with a focus on oil. The group has grown from one office in Malaysia to four subsidiaries with global offices. It typically signs 3-5 year contracts to provide services in project verification, quality enhancement, certification and engineering support. The majority of sales arise from maintenance and vendor inspection to owners of oil and gas facilities. The certification division is qualified to provide ISO 9000 approval and the engineering support business has an international network of qualified engineers providing manpower for various projects.

The group faces competition from larger players like Moody International, Bureau Veritas and TUV. However it benefits from a wide network of international offices which aids its marketing efforts to multi-national companies. Velosi is currently servicing Chevron in Nigeria until 2009; Ras Gas until 2008; Kuwait Gulf Oil until 2011; plus two long term contracts with Qatar Petroleum.

Revenues during 2004 and 2005 grew significantly after the launch of its Nigerian operations. This division now accounts for 25% of group turnover. Sales in calendar 2005 rose by 93% to $32.3 million, while operating profits climbed 218% to $3.8 million. The current year has produced equally aggressive growth, with the five months to 31 May generating a 139% rise in sales to $22.9 million, with operating profits up by 220% to $3.2 million. The increasing demand for inspection services will push revenues ahead to an estimated $60 million by 31 December 2006, rising to $77.9 million in 2007, according to house broker Charles Stanley. Pre-tax profits will scale up accordingly, reaching $7.1 million in 2006 and $9.7 million in 2007.

With 10 million pounds in new money, Velosi has a strong balance sheet to fund its expansion both organically and through acquisitions. It is yet to establish a presence in France , Germany , Korea and Japan but intends to do so through acquiring smaller regional players. The target businesses will offer a smaller range of services but will benefit from being a part of the larger group. The first such deal was made in August when Velosi bought 51% of Australian-based QAM for $612,000.

There are of course some risks to consider. Last year, the largest client, Mobil Nigeria , accounted for 27% of all revenues. Indeed, the top ten clients account for 57% of all sales. Projects are becoming increasingly large and long term in nature which exposes the group to hefty revenue shortfalls when those contracts end, should they not be otherwise replaced. Furthermore, the rapid growth of the oil and gas industries has led to skilled staff shortages in certain areas. While Velosi is not suffering from such constraints at the moment, this may well become an issue going forward potentially resulting in more, lower margin, subcontracting. Positively, exposure to forex risk is limited because 88% of revenues are derived from currencies which are linked to the dollar. The UK and Europe are the only exceptions to this.

The financial forecast is actually quite conservative and is based solely on predicable revenue streams. So the upside could be even greater then we imagine. But even these cautious numbers put Velosi's shares on a 2007 earnings multiple of 10 which is far cheaper than its peers. Indeed, oil services are highly rated, with an industry average of more than 16 times for 2007. The group has proven its ability for solid top and bottom line growth over the last three years and has reached critical mass in terms of service offering and geographical coverage. With acceleration in earnings growth due imminently Velosi is a BUY.

[hedgehunter] 11/10/2006 00:45

A Summary Of Velosi Group Services
The Group's principal services comprise:
(i) project verification services;
(ii) quality enhancement services;
(iii) certification services; and
(iv) engineering support services.

Project verification services
Project verification services are provided on behalf of asset owners to ensure that assets under construction are assembled to certain quality standards. In addition to monitoring the construction of assets the Group ensures that engineering companies contracted to work on-site do not compromise on quality and safety factors and that suppliers manufacture according to the precise scope specified.

Project verification services are provided during the asset construction process and may include reviews of project designs, the implementation and operation of quality management systems, auditing and monitoring of contractor quality procedures and on-site supervision of contractors.

Assets for which the Group can provide verification services include, inter alia, the following:

• offshore platforms and structures;
• oil and gas pipelines, both sub-sea and onshore;
• natural gas processing, petrochemical, desalination and power plants; and
• product receiving terminals and process units.

The Group provides its project verification services either on a project-specific basis or on a long-term retention basis, under which the Group would generally be expected to service a number of projects during the life of the contract. The Group is currently providing project verification services to a number of leading multi-national companies, including Chevron and ExxonMobil. The Group's project verification contracts are typically between three and five years in length.

Quality enhancement services
The largest proportion of the Group's turnover is derived from the provision of ongoing maintenance-related services and vendor inspection services to owners of oil and gas facilities, petrochemical and power plants and industrial complexes world-wide.

Maintenance related inspection enables asset owners to safeguard capital investments and take steps to ensure that production outputs are not disrupted. The Group is able to undertake in-service and shutdown inspections of plants and structures including specialised non-destructive testing, residual life assessment and corrosion monitoring of key structural components. These services are carried out on-site and, where required, the Group provides specialised teams trained to access difficult work locations, such as off-shore drilling and production structures, for inspection, testing, repair and maintenance.

The Group provides maintenance related inspection services to a number of oil companies, and is typically retained on long-term contracts of between three and five years. The Directors believe that the provision of such services for existing assets reduces the Group's reliance on continual investment in new production assets within the oil and gas industry worldwide.

Vendor inspection services ensure that material or equipment supplied to asset owners on an ongoing basis is produced to the specification requested by the manufacturer, and include assessments and quality assurance audits of vendors and inspection of equipment at various stages of design and manufacture. The use of the Group's vendor inspection services are required to ensure that projects under construction, which are typically capital intensive, are not delayed unduly as a result of the late supply of components or the supply of unsuitable components.

Certification services
The Group is accredited by international technical authorities to certify plant and equipment as being compliant with strict statutory requirements. Equipment which the Group is approved to certify includes pressure equipment, heavy lifting equipment (including cranes) and boilers. There are certain statutory requirements which typically require asset owners and/or operators to certify such equipment on a regular basis, creating the opportunity for sustainable revenues for the Group.

Furthermore, the Group is accredited to certify systems as qualifying for international quality standards, including ISO9000.

Engineering support services
The Velosi Group provides specialised technical manpower to companies in the oil and gas and petrochemical sectors, typically on contracts ranging in length between three months and three years. The Group maintains a database of internationally located qualified engineers from which such manpower is sourced.

[hedgehunter] 11/10/2006 00:43

CompANYS WEBSITE AT THE TOP OF PAGE.......

For all investment enquiries please contact Mr. Daniel Ooi – Finance Director ([e-mail]).

[hedgehunter] 11/10/2006 00:38

Robsy I think we need a broker report for that or the prospectus.

Might be on earlier threads if not try the companys website.

[robsy2] 10/10/2006 17:49

Hi everybody
I am having a little sniff around this one and thought I would add my thoughts.But before I do i must say (once again) thank you JW for all the hard work put in.
In general I am interested in businesses that profit from increasing regulatory requirements, quality control and testing etc.Velo looks to be in that general area and as such it looks interesting and cheap.
There are some negatives about the subsidiaries,concentration of sales etc etc all well documented above.
What I am interested in knowing more about is what the drivers are for this business. At the moment 50% of biz comes from new project management work , maybe this will slow down?Is this sustainable over the coming years?
Does anybody know who their competition is and what rating they are on so we can make a comparison?
r

[hedgehunter] 10/10/2006 12:15

HW, MYHOMES is probably the best company on Ofex and I beleive its the best purchase I have made in years and Ive been in this business 24 years now. When it gets to Aim it will be appreciated by the market.

Velosi is also a good un in my opinion, I think we will make a lot of money from both.

Good luck,

cheers hedge.

[hard work] 10/10/2006 12:10

Hi there HH. Velosi and Myhome - two good 'uns if you ask me!