HomeStory Archive2010 OTTO MARINE: Seismic foray backed by marine tycoons BT Tan and KS Tan
Forum (Latest Posts)
Re:Sinotel Technolog... by neontet12th, Mar. 06:48 PM Very reassuring to know that Sinotel is getting higher in the val...
Re:Hotung by sgmarket12th, Mar. 05:27 PM Ah... just announced that one of its directors have bought 3milli...
Re:Design Studio - e... by newbie12312th, Mar. 04:15 PM Think like Design Studio and Kingsmen Creative have rested too lo...
Re:Hotung by sgmarket12th, Mar. 03:25 PM 1. Shares trading at steep discount of 0.55 P/BV
2. Announced di...
Re:Hiap Hoe by sumer12th, Mar. 02:21 PM Hiap Hoe went ex-bonus yesterday. The theoretical ex-bonus price ...
OTTO MARINE: Seismic foray backed by marine tycoons BT Tan and KS Tan
Written by Sim Kih
Thursday, 04 February 2010
Tan Boy Tee's (above) investment vehicle, Bestford, is managed by former Kim Eng research head, Sebastian Heng.
SHIPBUILDING AND CHARTERING are capital-intensive, but Otto Marine has two heavyweight investors to fund its plans to widen its scope of marine & offshore vessels.
It announced this evening after the market closed that two local tycoons who made their money in the marine & offshore industry were among the investors in its recent S$95 million placement exercise.
Mr Tan Boy Tee, who founded Labroy Marine, and Mr Tan Kim Seng, who founded KS Energy, took stakes in Otto at 43.2 cents per share, or a 9.83% discount to Otto’s market price when the placement was announced.
Smart money has its following.Analysts became interested in the stock after market rumors surfaced that the two prominent businessmen were in the stock.
Kim Eng Research and Phillip Securities initiated coverage on the stock just last month.
Taking into account DMG's upgrade, the consensus target price is now 63.7 cents, translating to a 35.5% upside based on today's close price of 47 cents.
Otto Marine is one of the five major Anchor Handling Tug Supply (AHTS) players globally and has one of the largest shipyards in Batam, with modern facilities and low infrastructure and labor costs.
Other than building and repairing anchor handlers, it also constructs complex platform supply vessels (PSVs) and offshore construction vessels, with a level of sophistication suitable for operations in the harsh North Sea.
There is a short term overhang caused by a supply glut in the numbers of deliveries expected of offshore support vessels (OSVs) globally, particularly the smaller vessels.
This may continue to depress vessel pricing and charter rates in certain segments, so Otto wants to build larger and higher specification OSVs that are currently still in strong demand.
Shipbuilding contributed 95.3% to Otto’s top line for the first 9 months of 2009, but the vessel builder wants to expand its ship chartering revenue contribution to 30% to 35% in 2010.
Report Date
Broker
Call
Target Price
Upside
13 Jan 2010
Phillip Sec
Buy (Initiation)
58 cts
23%
11 Jan 2010
Kim Eng
Buy (Initiation)
64 cts
36%
12 Jan 2010
DMG
Buy
69 cts
47%
Last year, it started a seismic vessel chartering business by investing 74% in Reflect Geophysical Pte Ltd.
Reflect won a contract from the New Zealand government to operate a seismic vessel in New Zealand’s new frontier basins for US$10m in Nov, and another US$3.9m contract last month from OMV New Zealand to conduct 2D seismic survey off the southeast of the South Island of New Zealand.
Story Archive 