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Stocks In Focus SG (Logistics Holdings, Mermaid Maritime Public Company, WE Holdings) – 16/09/13
Logistics To Invest $5m To Venture Into Precast Business
Logistics Holdings plans to venture into the precast business and set up a precast plant in Iskandar region, Johor, Malaysia. Its subsidiary, Logistics Investment, will be forming a joint venture company, CCL Precast, together with an unrelated partner, Concrete Innovators Company (CIC). Set up with an initial capital of $100,000, CCL Precast intends to invest approximately $5 million, funded by its initial public offering proceeds and bank borrowings, to build a facility for precast products with an annual capacity of 21,000 cubic metres on a land plot of approximately seven acres. The facility is expected to complete in mid-2014 and will primarily serve public and private residential or commercial projects in Singapore while any excess will be channelled to external customers.
Significance: Given the tightening of foreign labour and rising construction cost, the proposed venture is expected to raise Logistics’ operational productivity and improve its cost efficiency. It will also be in line with the company’s efforts to open new revenue streams for the company.
Mermaid Maritime Wins US$55m Subsea Services Contract
Mermaid Maritime Public Company announced that its subsidiary PT Seascape Surveys Indonesia has been awarded an initial of two years contract for the provision of offshore inspection, repair and maintenance (IRM) services to a major Indonesian based upstream oil and gas operator. The estimated contract value for the initial term is US$55 million and has an additional one year option. Seascape will be utilising the Indonesian flagged DP2 vessel, M.V. Endeavour, and will be directly providing full service air diving and remotely operated vehicle spreads for this IRM campaign through in-house resources. This will mark the first major diving contract Seascape has undertaken to date.
Significance: The contract win is a tremendous accomplishment for the company as it underscores its client’s trust in the company to undertake this project. It intends to further expand its service offerings into diving services based on the demand for its services from the Indonesian market.
WE Holdings Buys Europtronic’s Unit For $6.8m
WE Holdings entered into a conditional sale and purchase agreement with Europtronic Group, for the acquisition of the latter’s component distribution subsidiary, Europtronic (Singapore). Europtronic (Singapore) is in the business of trading of electronic component and the provision of handling services. The acquisition will cost WE Holdings $6.8 million, based on the sum of the net adjusted current asset value of Europtronic (Singapore) of $4.8 million and a premium of $2 million. WE Holdings will be funding the acquisition via the allotment and issuance of new shares at $0.0524 to Europtronic Group. Upon completion of the acquisition, Europtronic (Singapore) shall have at least $0.5 million in its bank as working capital and at least $3.8 million in available banking facilities.
Significance: WE Holdings views the acquisition of Europtronic (Singapore) as a good investment for it to expand its component business as it allows the company to tap on a different product range within the component business and leverage on Europtronic (Singapore)’s extensive network of customers and distribution channels, thereby generating economies of scales.
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