Courage Marine's traditional business has been transporting dry bulk such as coal on Asian trading routes. The stock recently traded at 7.9 Singapore cents, which is at a discount to its end-March NAV of 9.1 Singapore cents.


Hsu Chih-Chien, Chairman of Courage Marine. NextInsight file photo

FROM SAILING the seas to investing in a condo project in Pheng Gheck Avenue near Potong Pasir MRT station.

Courage Marine, which is dual-listed in Singapore and Hong Kong, has entered into a MOU which will see it diversifying into property development for the first time.

It's the second property-related deal for Courage Marine in two months.

Giving the rationale for the latest one, the company said in a statement on Friday that the dry bulk market in which it operates is under intense pressure due to "the retreating weight of PRC as the driver of that market."

Thus, the Group (market cap S$84 million) needs to diversify its income base to reduce its dependence on freight income.

Its key partner in the property project is Singapore construction group Santarli Group, which has used Courage Marine's vessel chartering services since 2007 for the transport of sea sand.

Through this working relationship, Courage Marine is "confident of Santarli's ability and integrity".

The other partners, each to hold 10% stakes, include Excel Precast (a member of Santarli Group), and Mr. Chan Thiam Seng (a founder of Santarli, who is holding the stake in trust for a legal entity which is being formed).

Interestingly, another partner is Transview Holdings, a Singapore listco whose core business is in golf equipment.

Analysts in HK meeting with Courage Marine chairman Hsu (right row, centre) and CFO Carl Yuen (extreme right).
NextInsight file photo.

For a 10% stake in the JV company, Courage Marine said its wholly-owned subsidiary, CM Overseas, will make a total capital contribution of S$5.5 million (US$4,345,000).

The project cost is estimated to be S$176,500,000, inclusive of the S$114.8 million for the acquisition of the land.

It will be funded largely by a bank loan of S$121.5 million.

Designated for residential development, the 99-year leasehold site was acquired at S$628.22 per sq foot per plot ratio.

Successfully tendered from the Urban Redevelopment Authority, the site covers an area of  54,210.8 sq ft with a plot ratio of 3.5.

The JV company intends to construct an 18-storey and a 5-storey condominium with approximately 242 residential units.

This project is the second property-related deal Courage Marine has entered into in two months.

In May 2012, it formed a JV company with Pure Casual Inc., and the JV company entered into an agreement with Pure Casual that a property in Shanghai owned by Pure Casual be transferred to the JV company.

This is to settle a US$3.8 million debt owed to Courage Marine by Jason Chang who controls Pure Casual.

Previous stories:

COURAGE MARINE, COSCO PACIFIC: Challenging 1H For Shippers

COURAGE MARINE debuts and dual-lists on HK Exchange

COURAGE MARINE: A 51% Jump In Dividend As Profit Rises

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#1 invester 2012-07-15 10:52
What net profit could Courage make by pumping in S$5 million ? I will do a v rough estimate: Assume $100K net profit on a $1 million average selling price. So, 242 units X $100K net profit = S$24 million. Courage's 10% share = $2.4 million. Not bad as it is 50% return on investment.

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