A LEADING provider of automation, control systems integration, proprietary energy management solutions and support services, Avanceon Limited completed 25 years in 2014. It went public last year, and its initial public offering was heavily over-subscribed.

Its pre-listing offering documents mentioned that “the company specialises in the development of real-time performance management systems for the process and discrete manufacturing industries. It also offers power and energy management integrated solutions as well as high-end software to integrate production and business applications, including the oil and gas and power sector. It employs 237 people in all stations combined; 70pc of these are engineers and about 80pc of them are of Pakistani origin”.

For an ordinary investor, it is difficult to understand all of the company’s activities, which is why most refer it simply as an ‘engineering company’. Avanceon is listed under the ‘technology and communication’ sector.

Its chairman, Bakhtiar H. Wain, told Dawn that “we are a bit different from other companies in that we carry out complete project installations. This could include hardware integration, field installation, commissioning and services”. He went on to claim that there is “not a single company with that profile and business area among those listed on the stock exchange”.

According to its annual report for CY14, Avanceon had two fully owned subsidiaries in the United Arab Emirates (Avanceon FZE) and the US (Engro Innovative Inc). Wain said the company’s Lahore office looks over the entire operations for South Asia and the Middle East.

The company is said to serve 15 industries, while its clients include various leading companies in the energy, oil and gas, and fast moving consumer goods sectors

The company is said to serve 15 industries, while its clients include various leading companies in the energy, oil and gas, and fast moving consumer goods sectors. It also caters to clients in life sciences, chemicals, metals and printing sectors.

For calendar year 2014, the company’s profit-after-tax clocked in at Rs478m, translating into earning per share (eps) of Rs4.52. This represented a growth of 9pc over the prior years’ net earnings of Rs438.5m.

The company had Rs2.47bn in total assets by end-December, according to its annual report for CY14. Its paid-up capital stood at Rs1.06bnm and unappropriated profit at Rs681.7m. Its Rs10-par value share ended last Thursday at Rs31.16.

At the moment, the company’s sponsors, directors and the CEO’s family hold 79.3m shares or 75pc of its total equity, followed by the general public with 20.3m shares (19pc stake) and foreign investors with around 3.6m shares (3.4pc of the paid-up capital).

Spectrum Securities analyst Abdul Azeem commented that Avanceon’s “gross profit grew by 39pc over the earlier year, resulting in gross margins reaching 46pc against 32pc in the previous year”.

The company reported fourth quarter net earnings of Rs296m, showing a drop of 5pc over the same period in the earlier year. For the year, other income declined by 43pc to Rs147m from Rs257m. The analyst attributed this to lower dividend income from its subsidiary Avanceon FZE. Other charges for the period reached Rs23m owing to higher exchange losses.

Azeem added that Avanceon has recently confirmed two contracts worth $1.8m, of which $1.2m is with Electro-Mechanical Doha for a period of 10-12 months. The other contract is with Saudi Aramco for a period of 2-3 months.

“With the addition of these projects in the company’s portfolio, we believe the company will maintain its growth momentum.”

Yet, when asked about this, Wain declined to make ‘forward looking statements,’ citing compliance with the code of corporate governance. He, however, referred to the future plans for ‘Highway 50,’ which, he said, was well-documented and also shared with all investors. It refers to certain ‘critical’ goals the company has set for itself; the most prominent one is ‘to increase revenue to $50m by 2018’.

Other plans included “increasing and retaining highly trained human capital; reduction in execution of processes; relationship and responsiveness for client success and drive after project sales and services”.

The company hopes that by earning $50m in revenue, it would be better positioned to gain more leverage and bargaining power when offering bids along with multinational competitors.

Published in Dawn, Economic & Business, May 25th, 2015

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