Li Jialin and Eric Ong of Maybank Securities have kept their “buy” call and 45 cents target price for LHN after the co-living operator announced it is adding two new developments to its portfolio.

First, LHN won a government tender for the former Bukit Timah fire station, which will be refurbished at a cost of $7 million to become a mixed-use project with 60 serviced apartment units on levels 2 & 3, and a ground floor commercial F&B and retail operation.

According to LHN, this site will serve as a key community node for both the Rail Corridor and the surrounding precinct and is expected to be open by June 2025.

“In our view, the Bukit Timah project should capitalize on LHN’s expertise and synergy across its business units in co-living, commercial and facility management,” write Li and Ong in their April 11 note.

Meanwhile, LHN is also teaming up with Oxley Holdings 5UX 0.00% CEO Ching Chiat Kwong and his son Shawn Ching in a 50-50 joint venture to acquire Wilmer Place, which is at 50 Armenian Street, near the City Hall MRT.

According to the Maybank analysts, the office building could remain as a commercial building or be re-purposed for LHN’s co-living business.

With a land area of 710.7 sqm, the leasehold building has a tenure of 99 years from 1 May 1947. This should enable the LHN, which is spending up to $24 million for this project, to expand its co-living offerings under its space optimization business segment.

In total, LHN has 6 upcoming projects, including the Ministry of Health hostel for 700 nursing professionals.

To help fund this growth, LHN is offering commercial paper of up to $5 million, at a 6% interest rate

With MOH proposing another 11 other sites, this suggests possible re-rating catalysts for LHN if it can secure more of these projects, according to the Maybank analysts.

Their target price of 45 cents is pegged at 8 times forward FY2024 earnings.

LHN shares changed hands at 34 cents as at 2.05pm, up 1.52% for the day.

  • Acquisition of BK Aesthetics Clinic at 100AM Mall, Tanjong Pagar
  • Consideration of S$117,026 based on independent asset valuation and
    share exchange at S$0.015 per piece

SINGAPORE, 11 April 2024 – Beverly JCG Ltd. (SGX: 9QX) (the “Beverly JCG” or
the “Company”, and together with its subsidiaries, the “Group”), a reputable brand in
Malaysia, together with Beverly Wilshire (“BW”), a multi-award-winning integrated
beauty and wellness medical group specialising in cosmetic surgery, aesthetic medicine,
general and specialist dental aesthetics, hair restoration and a range of healthy ageing
and wellness services, wishes to announce that on 9 April 2024, the Company has
entered into a sale and purchase agreement to acquire BK Aesthetics Clinic located at
#04-11 and #04-12, 100AM, 100 Tras Street, Singapore, to enhance the Group’s
portfolio in the healthcare and wellness sector.

The acquisition, settled through a share exchange valued at S$0.015 per share,
underscores Beverly JCG’s investment in regional growth and expansion. By
incorporating BK Aesthetics Clinic into its portfolio, Beverly JCG is setting a strong
foundation for growth through a foray into Singapore and signals its intention to explore
further acquisition opportunities. This initiative aligns with the company’s broader
objective to become a leading regional player in healthcare, wellness, and beauty.

Dato’ Ng Tian Sang, Deputy Chairman and CEO, stated, “This transformative
acquisition marks a pivotal step in our ambition to establish Beverly JCG as the
preeminent force in the region’s healthcare, beauty, and wellness industry. We
remain committed to pursuing growth opportunities that will propel us to new
heights, solidifying our position as a trusted provider of unparalleled value to our
clients and shareholders.”

Beverly JCG’s acquisition of BK Aesthetics Clinic marks the start of its ambitious journey
to dominate the healthcare, wellness, and beauty industry in the region. The company
promises innovative solutions and exceptional service quality to its clientele.

Dyna-Mac Holdings has secured several contracts, bringing its order book to a new high of $896 million. These projects will be delivered till 2026.

The main contract involves the construction of process modules. It marks the largest-ever contract win in Dyna-Mac’s history, involving a record tonnage and number of process modules in a single contract.

The rest of the contracts include the provision of services for the execution, fabrication, installation and integration work on vessels, and scope increase for current projects.

According to Dyna-Mac, its recent capacity expansion and upgrading allows for the further optimization of construction methodology and production workflow. This will increase Dyna-Mac’s productivity in that it’ll use lesser manpower and time needed for the same amount of work.

The new orders are not expected to have a material impact on Dyna-Mac’s earnings per share (EPS) and net tangible assets (NTA) for the FY2024 ending Dec 31.

Shares in Dyna-Mac closed 1.5 cents higher or 4% up at 39 cents on April 2.

The ASEAN region, like the rest of the world, has seen a significant boom in the digital economy thanks to the rapid adoption of digital technologies and services by consumers and businesses during the COVID-19 pandemic.
According to the e-Conomy SEA report by Google, Temasek, and Bain & Company, Southeast Asia’s digital economy exceeded US$190 billion in gross merchandise value (GMV) in 2022 and is expected to grow at double digits to reach U295 billion by 2025.
 

Digital adoption continues to rise post-pandemic, with key sectors such as e-commerce, transportation and food, travel and online media fueling this growth.

On this note, monetization has gained momentum across the region over the last two years where the region’s revenue is expected to grow at a rate 1.7x higher than that of GMV. The emphasis on monetization is motivated by the quest for financial sustainability and improved unit economics across various sectors.

Multiple growth drivers to foster swift adoption

According to the Bloomberg 2021 report, ASEAN possesses the world’s most rapidly expanding mobile wallet market. The upswing in cross-border trade over the past decade has played a pivotal role in driving the adoption of digital payments.

Historically, cross-border transactions were linked to high costs and prolonged processing times. However, digital payments have now emerged as a convenient and efficient solution to overcome these challenges.

In fact, a recent global study, conducted in partnership with Juniper Research, predicts a staggering 311% growth in the number of mobile wallets used across Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam from 2020 to nearly 440 million by 2025.

A PWC report also shared about how “consumers are swiftly embracing digital financial services, signaling a shift away from the era where cash reigned supreme”.

According to a recent report by Google, Temasek, and Bain & Company, digital payments now constitute over 50% of transactions in the region.

In certain areas like Southeast Asia, the prevalence of digital payments through e-wallets has already surpassed physical card payments and is poised to become the predominant method across point-of-sale systems overall,” noted Dan Jones and Alex Walker of OliverWyman.

As technology continues to reshape the financial landscape, ASEAN nations are also embracing innovative solutions to cater to the evolving needs of consumers and businesses alike.

 

For instance, to support the development and integration of digital payments in the region, 5 ASEAN central banks – Bank Indonesia, Bank Negara Malaysia, Bangko Sentral ng Pilipinas, Monetary Authority of Singapore (MAS), and Bank of Thailand – have signed a cooperation agreement to establish an interoperable cross-border payment system that will allow instant and seamless digital transactions across ASEAN countries.

The system will use QR codes as a common standard for digital payments, enabling users to scan and pay with their preferred mobile wallets or apps. The system will also facilitate remittances and e-commerce transactions, as well as reduce the reliance on cash and the U.S. dollar.

Tapping on the digital payments’ revolution

As the ASEAN digital payments industry continues to flourish, savvy investors are eyeing opportunities to benefit from this upward trajectory.

 

One way is to invest in the companies who have secured digital banking licenses in Singapore to provide banking services entirely online, without any physical branches.

As of 2023, there are 4 digital banks in Singapore:

·         GXS Bank (consortium backed by Grab Holdings and Singtel)

·         MariBank (owned by SEA Limited)

·         Anext Bank (backed by Ant Group – Alipay)

·         Green Link Digital Bank (consortium involving Greenland Financial, Linklogis Hong Kong, and Beijing Co-operative Equity Investment Fund Management)

Digital banks help to streamline tedious financial processes and offer various advantages for customers and merchants, such as convenience, efficiency and cost-effectiveness.

For example, GXS Bank, a consortium backed by Grab Holdings and Singtel, leverages its existing ecosystem of ride-hailing, food delivery, e-commerce, and mobile payments to offer seamless and integrated banking solutions for its users and partners.

Green Link Digital Bank, backed by Greenland Financial Holdings, intends to use its experience in real estate, logistics, and trade finance to offer cross-border payment and lending solutions for SMEs in Singapore and China.

Another direct way that investors can tap on the digital payment revolution is through Oxpay Financial, a payment solutions provider that offers online and offline payment services in Singapore and abroad.

Oxpay Financial operates a payment gateway platform that connects merchants with various payment methods such as credit cards, e-wallets and bank transfers. Given its presence in the 4 ASEAN countries Singapore, Malaysia, Indonesia, and Thailand, Oxpay emerges as an attractive investment option for those seeking exposure to the growing digital finance market in ASEAN.

You can read more about Oxpay Financial’s tie-up with GLDB here.

Conclusion

With the ASEAN digital banking and payment systems industry undergoing a remarkable transformation, Oxpay Financial, with its innovative solutions and strategic approach, stands out. Oxpay Financial is poised to play a pivotal role in shaping the future of digital payments in ASEAN.

The shift towards digital payments in ASEAN is not just a fad; it’s a structural shift fueled by technological advancements and changing consumer behaviors.

As the financial landscape continues to evolve and digitalise, this trend will create many promising investment opportunities for those looking to capitalize on the digital finance boom in the ASEAN region.

The construction scene in Singapore took a hard hit from the COVID-19 pandemic. Supply chains got all tangled up, projects were delayed, and the demand for new developments dropped like a brick (pun intended).That being said, the industry is showing signs of recovery and rejuvenation, thanks to the solid backing from the government’s projects and the resilience of the industry players.In this article, we will highlight the underlying trends that will shape the sector and Singapore’s construction industry outlook in the foreseeable future.

4 Leading Construction Trends

The construction sector was among Singapore’s worst-hit industries during the pandemic. The slow productivity in construction work was largely due to substantial labour shortages amid ongoing border restrictions and implementation of stringent safety measures.

Consequently, Singapore’s heavy reliance on low-cost foreign labour for its construction sector has spurred a heightened urgency for construction businesses to integrate digital solutions, fostering adaptability and enhancing efficiency and productivity.

On top of that, in accordance with the new policy – Singapore Green Plan 2030, the government has pinpointed sustainability as a primary focus within the built environment sector.

Accordingly, four prominent trends are poised to mold the industry in the medium and long term. These encompass:

1.      A growing demand for green buildings, manifested through the adoption of eco-friendly building solutions, such as smart sensors for monitoring water and energy usage.

2.      A mounting emphasis on efficient construction practices, with the government advocating for the adoption of the Design for Manufacturing and Assembly methodology. This involves designing construction for off-site manufacturing before final assembly on-site.

3.      A shift towards more inclusive designs, ensuring that the built environment accommodates individuals with diverse needs. Addressing the design requirements for an aging population holds particular significance, given that over a third of Singapore’s population is projected to be over 65 years old by 2035.

4.      Increased incorporation of smart technology through the utilization of Integrated Digital Delivery (IDD). This approach leverages digital technologies to seamlessly integrate work processes and connect stakeholders involved in the same project throughout the construction and building phases.

In a nutshell, the Singapore authorities maintains an ongoing emphasis on sustainable practices, with the implementation of regulations pertaining to the use of prefabrication elements, decarbonization, redevelopment, and environmental protection and management at construction sites.

Breakdown of Construction Projects Pipeline

According to a media release, the Building and Construction Authority (BCA) projected that contracts totaling between $27 billion and $32 billion are likely to be awarded in 2023 – similar to what was observed in the past two years.

The private-sector construction demand is anticipated to be between the range of $11 billion to $13 billion, mirroring the figures from 2022. This projection is tied to the scheduled development of new condominiums and high-specification industrial buildings.

On the other hand, an estimated 60 percent of the overall construction demand for year 2023 is anticipated to come from the public sector, amounting to a range between $16 billion and $19 billion. This is attributed to the upcoming projects such as Build-To-Order (BTO) flats, MRT lines, and water treatment plants.

In the medium term, the Building and Construction Authority (BCA) envisions the annual total construction demand to come in between $25 billion and $32 billion from 2024 to 2027.

During this period, the public sector expects to sustain its ~60% lead in demand, with upcoming projects such as the Cross Island Line and several hospital developments.

Simultaneously, private sector construction demand is anticipated to remain steady, with an annual expected range of approximately S$11 billion to S$14 billion from 2024 to 2027. This outlook is underpinned by robust investment commitments, supported by the resilient economic fundamentals of Singapore.

Building a Comeback

The construction industry in Singapore is poised for stability in the coming years, thanks to various factors such as the digitilisation measures to improve efficiency, Singapore Green Plan 2030 and many more infrastructure projects.

For construction firms that have faced financial challenges, particularly in the aftermath of the COVID-19 pandemic, this phase of stability marks a promising beginning for a potential revival. The sector’s ability to withstand adversity, coupled with a steady influx of projects, creates fertile ground for these companies to bounce back and, subsequently, transform into profitable entities.

Below we ‘drill’ into some of the construction-related stocks in Singapore…

singapore construction stocks undervalued

A quick glance shows that most of them are trading below 1x their book values and have below $100 million market capitalization. On top of that, many of them are still sitting near their 52 weeks low despite the recovery of the construction sector – something that investors can take notice of.

Now, let’s shine the spotlight on three stocks in the list:

Firstly, Tiong Seng Holdings Limited is a construction company in Singapore that has recently announced its intention to sell its leasehold property located at 510 Thomson Road for S$10 million.

Given that the proposed disposal is considered a major transaction under the SGX regulations, an extraordinary general meeting (EGM) was convened on 15 December 2023 and the ordinary resolution passed with flying colours (99% approval).

The company has stated that the rationale for the proposed disposal is to unlock the value of the property and to improve its cash flow and financial position. The company also intends to use the net proceeds from the proposed disposal for its general working capital purposes and/or to fund its business expansion plans.

Next up is BRC Asia – a construction company in Singapore that provides steel reinforcement solutions for various projects, such as buildings, bridges, and tunnels.

The company has state-of-the-art facilities and capabilities, such as the use of digitalisation, automation, and prefabrication technologies. The company also has a strong commitment to sustainability, as it supports the Singapore Green Plan 2030 and adopts green and smart features and standards in its projects.

BRC Asia’s orderbook remains robust, standing at S$1.3 billion as of end 4Q FY2023. It remains a strong proxy for Singapore’s construction sector, given its lion’s market share domestically.

Lastly, we have Sin Heng Machinery, one of the leading heavy lifting service providers in Singapore. The company has a fleet of cranes and aerial lifts that it rents out and trades and it also sells and distributes spare parts for the equipment that it deals with.

The majority of its orderbook is derived from the Land Transport Authority (LTA) and Public Utilities Board (PUB) and these government contracts are longer term and provide good orderbook visibility.

It also possesses a strong financial position with only a meager 0.9% debt/equity ratio and has been on an active shares buyback spree from September to November 2023.

Conclusion

In conclusion, Singapore’s construction industry is currently positioned for stability and expansion after the lessons learnt from the COVID-19 pandemic. With a focus on sustainability, digitalization measures, and a robust pipeline of infrastructure projects, the sector presents promising prospects.

This positive outlook is particularly beneficial for construction companies aiming to recover from temporary financial setbacks including the ones we cover: Tiong Seng Holdings, BRC Asia, and Sin Heng Machinery. While the construction sector may be perceived as dull and uneventful, its underlying stability and consistent demand make it a worthwhile area for investors to explore further.

Sheffield Green Ltd, a HR services provider for the renewable energy industry, has unveiled its financial performance for the fiscal year ending June 30, 2023.For more information on Sheffield Green and its recent IPO, check out: Sheffield Green set to ride on the clean energy wave via a Catalist IPO Listing

The company achieved a net profit of US$3.5 million, marking a significant turnaround from the loss of US$0.15 million in the preceding year. Gross margins also expanded from 15.8% to 28.0% during the same period – leading to a 528.3% Y-o-Y jump in gross profits to US$7.7 million.

This impressive growth is underpinned by a substantial 255% increase in revenue from US$7.7 million in FY2022 to US$27.6 million in FY2023, attributed to more contracts secured in the offshore wind industry.

The icing on the cake is the proposal of a final dividend of S$0.01 per share, less than 2 months after its IPO on 30 October 2023.

A quick look at its balance sheet shows that its debt/equity ratio stands at a paltry 8.9% so paying a dividend is no issue at all.

Navigating the Winds of Change

The company attributes its robust performance to the escalating demand for renewable energy initiatives, particularly in the offshore wind sector, where Sheffield Green holds a competitive advantage.

According to IRENA, employment in the renewable energy sector is expected to surge from 12.7 million in 2021 to 38.2 million by 2030.

After experiencing relatively flat spending between 2015 and 2020, investments in renewable energy, encompassing both private capital and public expenditure, increased significantly from USD 348 billion in 2020 to USD 499 billion in 2022, marking a substantial 43% growth. The majority of these funds were allocated to the solar and wind industries, with their collective share of total renewable energy investments escalating from 82% in 2013 to an impressive 97% in 2022.

In addition, Precedence Research estimates that the offshore wind sector is projected to grow from USD 33.0 billion in 2022 to USD 179.4 billion by 2032.

Hence, the company’s primary focus on offshore wind projects is well-timed, as the sector’s expansion is anticipated to catalyse substantial job opportunities in the renewable energy industry in the long run.

Company’s Growth Momentum

In its press release, the Group shared several initiatives to capitalise on these thriving industry trends namely:

  • Offering comprehensive human resource solutions
  • Sourcing for diverse roles from C-suite to technical and offshore crew positions
  • Provision of ancillary services such as meticulous handling of visa and work permit applications

To further strengthen its regional presence, the Group is strategically expanding into other international markets by establishing local offices. Notably, the Poland office commenced operations in November 2023, and plans are underway for the establishment of a US regional office in Boston.

Building on the success of its training centres in Taiwan, the Group envisions opening more training centres in markets like Japan and Poland to meet the escalating global demand for renewable energy personnel.

Bryan Kee, CEO of Sheffield Green, conveyed confidence in the FY2023 results with these comments:

“Reflecting on this transformative year, I am immensely proud of our team’s achievements. Our success in FY2023 is a direct result of the team’s relentless commitment, adaptability, and innovative strategies in the renewable energy sector.

Despite the challenging economic environment, we have not only managed to achieve significant growth but also enhanced our operational efficiencies and strengthened our market position. This success is a testament to our dedicated team and the solid partnerships we have fostered. We are excited to continue this momentum and further our mission of powering sustainable energy solutions.”

Peer Valuations

Based on the peer valuations chart above, Sheffield Green is trading at a relatively cheaper valuation compared to its global listed peers. The company has a price-to-earnings ratio of 8.9x, which is significantly lower than the industry average of 19x.

Some of the more renowned staffing players such as Manpower Group, Kelly Services and Singapore’s own HRnet Group have much higher P/E ratios of 17.4x, 31.4x and 11.1x respectively.

On top of that, Sheffield Green’s competitive edge in the renewable energy sector may be a stronger growth driver for its earnings going forward. This means that the company may be an attractive investment opportunity in the renewable energy staffing industry.

Conclusion

The Group’s strategic penetration into flourishing offshore wind markets in Taiwan, Japan, and Poland, coupled with its emphasis on workforce development, underscores its strong investment potential amid the burgeoning opportunities in the renewable (offshore wind) energy sector.

Be sure to ‘catch the wind’ as the Group navigates and capitalises on the rising momentum of renewable energy staffing solutions!

James Yeo: “Can you provide a detailed overview of Beverly JCG Ltd’s (BJCG) evolution and strategic transformations since its inception, particularly focusing on the key acquisitions and expansions and explain how these moves align with the company’s vision of becoming a major player in the aesthetic and healthcare industry in the region?”
Dato’ Ng: “BJCG has undergone several strategic shifts and significant acquisitions. It was established as Albedo Limited in 2005 as an industrial products trading company before it ventured into the healthcare sector by investing in China Medical (International) Group Limited (CMIG) in 2016. In January 2019, the company was renamed JCG Investment Holdings Ltd.”In Nov 2019, it acquired 51% of Beverly Wilshire (BW) group of companies, which operates a branded chain of aesthetics medicine, plastic surgeries, dental clinics, and regenerative stem cell medicine, including hair transplants in Malaysia in Kuala Lumpur, Klang Valley and Pelating Jaya, Bangsar, Ipoh and Johor Bahru.

The Ng family, headed by myself, was the controlling shareholder of BW group, with key doctors as my shareholders. BJCG recently acquired two aesthetic and beauty spa clinics, including Dr BK Kim, in 100 AM Mall Amara Hotel in Tanjong Pagar Singapore CBD. This will start our first foray into Singapore and will contribute Singapore revenue to BJCG.

This will also position BJCG as a regional player in aesthetic medicine and have Singapore as our business headquarters. We are also cautiously venturing into Indonesia, Vietnam, and China via mergers & acquisitions (M&As) to augment the company’s profit.

Recently, BJCG acquired the balance of 49% of BW Group, ensuring the shareholders’ goals and objectives are fully aligned. This acquisition is a significant milestone for the company and shall further strengthen the BW brand in Singapore and the region to make the BW brand a household word.

The decision to list the company’s shares in Singapore was strategic, leveraging Singapore as a centre of medical excellence and its reputation as an international financial centre. Through these transformations and strategic decisions, the company’s aim has always been clear – to become a major player in the aesthetic and healthcare industry in the region.”

James Yeo:

“How has BJCG’s financial performance evolved post-acquisition, and what strategies are being implemented to maintain profitability and expand growth opportunities, particularly in Malaysia and regionally?”

Dato’ Ng:

“BJCG recorded a revenue of about S$10.5 million in FY2022. Despite the global pandemic, BW made its maiden profit in 2021, particularly through our Malaysian operations.

We aim to solidify our regional presence and explore new profitable avenues, maintaining a strong performance while embracing growth opportunities.”

James Yeo:

“Could you explain the rationale and strategic significance behind the 50:1 share consolidation and how this move enhances the company’s market appeal, share liquidity, and overall financial strategy in preparation for future growth initiatives?”

Dato’ Ng:

“The share consolidation, at 50:1 (consolidating every 50 ordinary shares into one ordinary share), will reduce the issued shares from 29.1 billion to about 582.2 million. This is a strategic move to enhance our market appeal and improve the share liquidity and volatility.

It’s a step to recalibrate our share structure, making our stock more attractive and meaningful to investors. This consolidation is part of a broader strategy to fortify our financial foundation and prepare for future growth initiatives.”

James Yeo:

“Can you elaborate on the structure and objectives of the Rights Cum Warrants Issue at a 3:1 ratio, particularly in the context of the recent share consolidation, and explain how this initiative aims to attract investment and support BJCG’s growth strategies?”

Dato’ Ng:

“In our recent Rights Cum Warrants Issue, structured at a 3:1 ratio following the share consolidation, we’ve set an advantageous issue price of S$0.035 per Rights Share, a significant reduction from the initially announced S$0.05. This new issue price is strategically placed at a 30% discount to the post-consolidation last traded price of S$0.05 per Share and about 24% below the theoretical ex-rights price of S$0.046 per Share.

 

We’re offering free detachable Rights Warrants with an exercise price of S$0.051 for each Warrant Share, compared to the previously announced S$0.06. This exercise price represents a modest 2% premium over the post-consolidation last traded price and is approximately 10% higher than the theoretical ex-rights price.

These adjusted prices for both the Rights Shares and the Warrants are designed to enhance the appeal of our offering to investors, aligning with our strategic goal of bolstering BJCG’s growth and expansion, particularly in the wake of our recent share consolidation. We believe this initiative is pivotal in attracting investment and fortifying our market position.”

James Yeo:

“Could you describe BJCG’s philosophy and approach towards service and safety in the healthcare sector, and how does this ethos contribute to the company’s distinction in the competitive aesthetic market?”

Dato’ Ng:

“We are a branded, fully integrated healthcare outfit. And our philosophy is that we always provide the Best 5-star services and practice safety first.”

James Yeo:

“Could you discuss how investors may underappreciate the share consolidation and Rights Cum Warrants Issue in terms of their potential to enhance the company’s market dynamics and attract strategic long-term investment, especially considering your growth projections from 2024 onwards?”

Dato’ Ng:

“Some investors may not fully recognise BJCG’s growth potential. Our share consolidation and subsequent Rights Cum Warrants Issue are geared towards creating a more dynamic market for our shares and attracting long-term, strategic investors.

By setting an attractive post-consolidation Rights share base price, good M&As, and a well-defined strategic alliances plan, BJCG will do better from 2024 onwards.”

James Yeo:

“As BJCG navigates its strategic initiatives and market developments, what message would you like to convey to our readers about the company’s direction, its approach to creating stakeholder value, and the opportunities it presents for investors in its ongoing transformation and growth?”

Dato’ Ng:

“While share consolidation often leads to initial market reactions, we are confident about our strategic direction. We have several key initiatives underway that should positively influence our stakeholders’ value.

Our approach goes beyond mere market trends; we are actively shaping our future with a clear strategic vision, a dedicated team, and a commitment to growth. BJCG represents a solid investment choice and a journey of transformation and success.”

Established in 1991, Marco Polo Marine is an integrated marine logistics company that provides a wide range of services to the offshore oil and gas, and renewable energy sectors.

The company has reported a strong performance for its financial year ended 30 September 2023 (FY2023). In this article, we will zoom into its financial results, growth prospects, valuation and more.

Powered By Twin Growth Engines

Marco Polo Marine operates 2 main business segments:

1) Ship Chartering Division relating to the chartering of Offshore Supply Vessels (OSVs), tugboats and charters, and

2) Shipyard Division relating to shipbuilding and provision of ship maintenance, repair, outfitting, and conversion services.

For FY2023, Ship Chartering revenue experienced a significant 47.4% year-on-year jump to S$65.9 million from S$44.7 million in the previous year.

The principal factor contributing to this boost was the complete consolidation of PT Bina Buana Raya (“PT BBR”) and PKR Offshore’s (“PKRO”) results in the ongoing financial year, as opposed to the partial consolidation in FY2022. It’s noteworthy that PT BBR and PKRO officially became subsidiaries of the Group in March and May 2022, respectively.

To add on, the revenue from Shipyard segment also exhibited a stellar 47.8% year-on-year increase to S$61.2 million as compared to the previous year, driven by higher contract values associated with repair projects and the initiation of new ship-building projects.

Consequently, Marco Polo Marine reported a substantial 78.9% year-on-year growth in EBITDA to reach S$43.3 million, underpinned by the higher revenue and better gross profit margins.

Excluding FX gains/losses and one-off items, the group’s adjusted net profit to owners saw a spectacular 82.6% jump from S$13.8 million in FY2022 to S$25.2 million in FY2023.

With that in mind, Marco Polo Marine is a leading integrated marine logistics group The company operates in Singapore, Indonesia, Malaysia, and other parts of Southeast Asia, and has been listed on the Singapore Exchange since 2007.

Stellar Growth Prospects

For the Shipyard business, the growth continues to be propelled by elevated contract values for ship repair projects and the securing of contracts to build several barges with progressive deliveries up to 2HFY2024.

The shipyard’s average utilisation rate stands at 84% in the 2Q FY2023 and has remained relatively stable in the past year as well.

For the Ship Chartering business, revenue growth has surged due to higher vessel utilisation and increased charter rates.

As seen from the chart above, average charter rates have climbed steadily from 112.80 points in 1Q FY2022 to 209.60 points in 2Q FY2023.

The trend for the ship chartering segment of Marco Polo Marine is positive, as the company expects to see sustained demand for its vessels, especially in the Asia’s offshore wind farm sector, which is expected to grow rapidly in the coming years.

On this note, Marco Polo Marine has established a strong presence in the offshore windfarm division through its partnership with Oceanic Crown Offshore Marine Services Ltd. and by acquiring PKR Offshore Co. Ltd.

The Group has also been securing significant opportunities in the offshore wind farm sector and has achieved notable milestones, including:

  • Building its inaugural Commissioning Service Operation Vessel (CSOV), slated for completion in the first quarter of 2024.
  • Establishing a Memorandum of Understanding (MOU) with Vestas Taiwan for the CSOV’s charter.
  • Venturing into the Japanese market with a groundbreaking MOU signed with “K” Line Wind Service, Ltd (KWS).
  • Making its debut in the South Korean market through MOUs with Namsung Shipping Co., Ltd. (Namsung) and HA Energy Co., Ltd. (HA-E) on January 11, 2023.

According to marketsandmarkets.com, the global offshore wind farm market was valued at US$31.8 billion in 2021, and is projected to reach US$56.8 billion by 2026, registering a compound annual growth rate (CAGR) of 12.3% from 2021 to 2026. This bodes well for the company.

To top it off, things are also picking up in the oil and gas markets, and this is expected to boost the charter rates for their offshore support vessels in the coming financial year.

Notable Recent Purchases by Company Insiders

In the year 2023 itself, we have 2 notable recent purchases from 2 individuals. Mr. Yun Lee, CEO of the firm, has acquired 1 million shares from the open market on 12 May 2023.

On top of that, Mr. Teo Jun Xiang, Non-Executive Director and Managing Partner of family office Apricot Capital, has been on an acquisition spree, snapping up a total of 5.5 million shares in the past year.

What’s worth noting is that his purchase prices are all above 5 Singapore cents, which means shareholders are getting a bigger bang for their buck since the stock is trading at S$0.048 at the time of writing.

Furthermore, Apricot Capital and CEO Mr. Yun Lee own a sizable 16.17% and 4.58% stake in Marco Polo Marine respectively, which gives them the incentive to grow the business because they have the biggest vested interest of all.

Valuation backed by hard assets

As of 30 September 2023, the Group is also sitting on a cash balance of S$63.1 million. Deducting the total borrowings of S$2.3 million, it equates to a strong net cash position of S$60.8 million.

This provides the Group with the financial flexibility to continue expanding its footprint in the thriving offshore wind farm market. On top of that, the company wishes to celebrate this achievement by rewarding shareholders with a dividend of S$0.001 per share, equivalent to an estimated 2.1% dividend yield.

In addition, the Group’s valuation is also primarily backed by hard assets including cash, OSVs and its Batam shipyard. As of 30 September 2023, the Group has a net asset value of S$0.043 per share, translating into a Price/Book of 1.1x.

Conclusion

In conclusion, Marco Polo Marine has demonstrated a robust FY2023 performance with its top- and bottom-line increasing double digits on a year-to-year basis.

We can also see how the expansion into offshore windfarm markets in Asia and recent insider purchases underscore confidence in the company’s prospects.

As the company continues to navigate the dynamic marine logistics landscape, investors can look forward to potential value creation and sustained growth.

Established in 1991, Marco Polo Marine is an integrated marine logistics company that provides a wide range of services to the offshore oil and gas, and renewable energy sectors.

The company has reported a strong performance for its financial year ended 30 September 2023 (FY2023). In this article, we will zoom into its financial results, growth prospects, valuation and more.

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Marco Polo Marine operates 2 main business segments:

1) Ship Chartering Division relating to the chartering of Offshore Supply Vessels (OSVs), tugboats and charters, and

2) Shipyard Division relating to shipbuilding and provision of ship maintenance, repair, outfitting, and conversion services.

For FY2023, Ship Chartering revenue experienced a significant 47.4% year-on-year jump to S$65.9 million from S$44.7 million in the previous year.

The principal factor contributing to this boost was the complete consolidation of PT Bina Buana Raya (“PT BBR”) and PKR Offshore’s (“PKRO”) results in the ongoing financial year, as opposed to the partial consolidation in FY2022. It’s noteworthy that PT BBR and PKRO officially became subsidiaries of the Group in March and May 2022, respectively.

To add on, the revenue from Shipyard segment also exhibited a stellar 47.8% year-on-year increase to S$61.2 million as compared to the previous year, driven by higher contract values associated with repair projects and the initiation of new ship-building projects.

Consequently, Marco Polo Marine reported a substantial 78.9% year-on-year growth in EBITDA to reach S$43.3 million, underpinned by the higher revenue and better gross profit margins.

Excluding FX gains/losses and one-off items, the group’s adjusted net profit to owners saw a spectacular 82.6% jump from S$13.8 million in FY2022 to S$25.2 million in FY2023.

With that in mind, Marco Polo Marine is a leading integrated marine logistics group The company operates in Singapore, Indonesia, Malaysia, and other parts of Southeast Asia, and has been listed on the Singapore Exchange since 2007.

Stellar Growth Prospects

For the Shipyard business, the growth continues to be propelled by elevated contract values for ship repair projects and the securing of contracts to build several barges with progressive deliveries up to 2HFY2024.

The shipyard’s average utilisation rate stands at 84% in the 2Q FY2023 and has remained relatively stable in the past year as well.

For the Ship Chartering business, revenue growth has surged due to higher vessel utilisation and increased charter rates.

As seen from the chart above, average charter rates have climbed steadily from 112.80 points in 1Q FY2022 to 209.60 points in 2Q FY2023.

The trend for the ship chartering segment of Marco Polo Marine is positive, as the company expects to see sustained demand for its vessels, especially in the Asia’s offshore wind farm sector, which is expected to grow rapidly in the coming years.

On this note, Marco Polo Marine has established a strong presence in the offshore windfarm division through its partnership with Oceanic Crown Offshore Marine Services Ltd. and by acquiring PKR Offshore Co. Ltd.

The Group has also been securing significant opportunities in the offshore wind farm sector and has achieved notable milestones, including:

  • Building its inaugural Commissioning Service Operation Vessel (CSOV), slated for completion in the first quarter of 2024.
  • Establishing a Memorandum of Understanding (MOU) with Vestas Taiwan for the CSOV’s charter.
  • Venturing into the Japanese market with a groundbreaking MOU signed with “K” Line Wind Service, Ltd (KWS).
  • Making its debut in the South Korean market through MOUs with Namsung Shipping Co., Ltd. (Namsung) and HA Energy Co., Ltd. (HA-E) on January 11, 2023.

According to marketsandmarkets.com, the global offshore wind farm market was valued at US$31.8 billion in 2021, and is projected to reach US$56.8 billion by 2026, registering a compound annual growth rate (CAGR) of 12.3% from 2021 to 2026. This bodes well for the company.

To top it off, things are also picking up in the oil and gas markets, and this is expected to boost the charter rates for their offshore support vessels in the coming financial year.

Notable Recent Purchases by Company Insiders

In the year 2023 itself, we have 2 notable recent purchases from 2 individuals. Mr. Yun Lee, CEO of the firm, has acquired 1 million shares from the open market on 12 May 2023.

On top of that, Mr. Teo Jun Xiang, Non-Executive Director and Managing Partner of family office Apricot Capital, has been on an acquisition spree, snapping up a total of 5.5 million shares in the past year.

What’s worth noting is that his purchase prices are all above 5 Singapore cents, which means shareholders are getting a bigger bang for their buck since the stock is trading at S$0.048 at the time of writing.

Furthermore, Apricot Capital and CEO Mr. Yun Lee own a sizable 16.17% and 4.58% stake in Marco Polo Marine respectively, which gives them the incentive to grow the business because they have the biggest vested interest of all.

Valuation backed by hard assets

As of 30 September 2023, the Group is also sitting on a cash balance of S$63.1 million. Deducting the total borrowings of S$2.3 million, it equates to a strong net cash position of S$60.8 million.

This provides the Group with the financial flexibility to continue expanding its footprint in the thriving offshore wind farm market. On top of that, the company wishes to celebrate this achievement by rewarding shareholders with a dividend of S$0.001 per share, equivalent to an estimated 2.1% dividend yield.

In addition, the Group’s valuation is also primarily backed by hard assets including cash, OSVs and its Batam shipyard. As of 30 September 2023, the Group has a net asset value of S$0.043 per share, translating into a Price/Book of 1.1x.

Conclusion

In conclusion, Marco Polo Marine has demonstrated a robust FY2023 performance with its top- and bottom-line increasing double digits on a year-to-year basis.

We can also see how the expansion into offshore windfarm markets in Asia and recent insider purchases underscore confidence in the company’s prospects.

As the company continues to navigate the dynamic marine logistics landscape, investors can look forward to potential value creation and sustained growth.

Property management operator LHN Limited (“LHN”) offers space optimisation solutions, property development, facilities management and energy services in Singapore and other Asian countries.

The Group currently has 4 main business segments, namely:

  • Space Optimisation
  • Property Development
  • Facilities Management
  • Energy

It has announced its FY2023 results ended 30 September 2023 and declared a final and special dividend in FY2023. On top of that, LHN announced that from it is moving from the Catalist board to the Mainboard of the SGX-ST on 13 December 2023.

With this in mind, here are 7 things investors should know about the company.

1. Growth driven by Co-living Brand Coliwoo

According to the latest FY2023 results, the Group’s main source of revenue and key driver of growth comes from the Space Optimisation Business, constituting 64.5% of the Group’s total revenue.

Revenue generated from this business segment saw a year-on-year increase of 46.1%, reaching S$60.4 million in FY2023, as compared to S$41.4 million in FY2022.

As seen from the table above, the Group’s residential properties managed a total of 2,064 keys as of September 2023, primarily fuelled by Coliwoo’s co-living business.

The ongoing renovation projects for 404 Pasir Panjang, as well as 48 and 50 Arab Street, are progressing as planned and are anticipated to contribute to the co-living business’s performance in FY2024.

In FY2023, the occupancy rates for key Coliwoo projects within the Group remained robust. Coliwoo Orchard reported an occupancy level of 93%, while Coliwoo Lavender and Coliwoo 298 River Valley achieved occupancy rates of 86% and 100%, respectively, as of September 2023.

Singapore’s co-living industry continues to thrive, driven by a confluence of factors that include surging rents and prices in the broader residential property market, higher adoption of hybrid work, as well as accelerating demand for flexible housing options by locals and expatriates, including singles and young couples.

2. Newly Added 4th Business Segment – Energy

In FY2023, the new Energy Business made its maiden contribution. This sector offers renewable energy services to industrial clients, encompassing electricity supply, the installation of solar power systems, and the provision of electric vehicle (“EV”) charging stations.

The firm has successfully deployed solar panels in 3 internal and 6 external locations throughout FY2023. Despite this segment representing only a small 0.5% share of the Group’s overall revenue, it is profitable from the onset – achieving an adjusted segmental profit of S$0.4 million for the same year.

3. Healthy Revenue and Operating Cashflow Growth

The Group experienced an 10.9% Y-o-Y increase in total revenue from continuing operations to S$93.6 million due to a broad-based growth in all business segments.

In contrast, net profit attributable to equity holders was down 16.6% to S$38.2 million over the same period, primarily due to net fair value losses amounting to S$8.7 million, as compared to a sharp fair value gains in FY2022 of S$24.8 million.

One should also note that the FY2023 net profit comprises of a gain of S$19.7 million following the successful divestment of LHN Logistics Limited and its affiliated companies (referred to as the “Logistics Group”) on 28 August 2023. The Logistics Services Business segment will no longer contribute to the Group’s performance from the next financial year onwards.

On a bright note, net cash generated from operating activities increased from S$41.2 million in FY2022 to S$54.2 million in FY2023, underpinned by enhanced working capital management.

4. Improving Balance Sheet

As of 30 September 2023, the net gearing ratio of the Group decreased to 43.6% compared to 44.5% a year ago, largely due to a few divestments during FY2023 which include:

  • A 20% interest in associate in car-sharing platform GetGo Technologies Pte. Ltd. for S$7.9 million
  • 50% interest in a JV of Amber 4042 Hotel Pte. Ltd. for S$23.3 million
  • 05% controlling interests in LHN Logistics Limited for S$31.9 million

These capital recycling initiatives helped to shore up its financial position while funding the growth of its Coliwoo business.

5. Higher Dividends to boot

Notwithstanding the reduced profit attributable to equity holders, LHN has recommended a special dividend and final dividend of 1.0 Singapore cent each per share.

If we were to include the earlier interim dividend of 1.0 Singapore cent per share, the total dividend per share for FY2023 stands at 3.0 Singapore cents per share.

Based on the closing share price of $0.34 as of 26 November 2023, the dividend yield comes up to an enticing 8.8%, much higher than the estimated 3.5% yield of the STI ETF.

Looking at the dividends chart, LHN has been dishing out dividends consistently since FY2020. This shows the commitment of the management to continue rewarding shareholders – note that the management team happens to be the the Group’s biggest shareholder as well.

6. Management Team

From the table above, we can see that LHN Capital is the largest shareholder of the firm with a 54% interest. The holding company LHN Capital is in turn owned by the Lim family – Mr. Kelvin Lim and his sibling Ms. Jess Lim.

Mr. Kelvin Lim has been the Executive Chairman & Group Managing Director since July 2014 and possesses over 20 years of experience in the property leasing business, including over 10 years of experience in the logistics services and facilities management business.

Ms. Jess Lim, Executive Director & Group Deputy Managing Director, has over 20 years of extensive and varied experience in business and supply chain management, comprising of over 15 years of experience in the leasing and facilities management business.

Given that both of them own more than half the company, this aligns the interest of owner-management with minority shareholders.

7. Bright Outlook Ahead

In general, LHN expects a bright outlook for the company as its biggest segment stands to benefit from the rising demand for space optimisation solutions, as more people and businesses seek flexible and affordable space options.

Notably, the firm is gunning for substantial growth in the Coliwoo Co-living business as the ongoing renovation of properties at 404 Pasir Panjang Road, 48 and 50 Arab Street, and 99 Rangoon Road are on track for completion in FY2024. These developments are projected to contribute an estimated 121 keys to the Co-living portfolio.

Last but not least, the shift of its listing to the SGX Mainboard will bolster the Company’s standing both domestically and internationally, fostering greater visibility and recognition in the market and among investors.

Some industry background on the dynamics of Singapore’s co-living sector – for your consideration