Personally, Executive Chairman Chang Yeh Hong purchased 3.5 million Nordic shares from 9 September to 7 October at between 15.5 cents and 18 cents each, increasing his stake to 52.7% as at 7 October.
The management has purchased close to 13 million Nordic shares over the past 5 years, since its IPO on 9 November 2010.
Photo by Sim Kih
NORDIC GROUP started repurchasing its shares from the open market a month ago, about two weeks after the count-down period began for Mainboard listed companies to comply with SGX’s minimum trading price (MTP) rule of 20 cents apiece.
Beginning on 1 March next year, Mainboard listed companies with a six-month volume weighted average price (VWAP) below 20 cents will not be eligible for purchases by investors under the CPF Investment Scheme.
Shareholders approved a share buyback mandate at its EGM on 29 April, a shot in the arm for MTP compliance. The program is subject to the following conditions.
- Up to 10% (40 million shares) of the Group’s issued capital may be repurchased from the open market
- The mandate is valid for a year until the next AGM date (expected to be on 29 April 2016)
- Purchase price must be less than or equal to 105% of the weighted average closing price market of the previous 5 trading days.
Over the past 6 weeks, combined share purchases by Nordic Group and its directors totalled more than 5 million shares and helped to lift Nordic’s share price by almost 20% to 19 cents apiece (as at 14 October).
CEO Dorcas Teo purchased 260,000 Nordic shares from the open market on 12 October, increasing her stake to 7.95%.
Photo: Company"We intend to support the share price in an orderly and systematic manner,” said Executive Chairman Chang Yeh Hong at Austin’s office at Benoi Road last week. He was speaking to analysts and other investment professionals who were visiting Austin Energy.
As at 13 October, the Group has only purchased 5.4% of the threshold of 40 million shares allowed, meaning there is much headroom for more share buybacks.
The management’s conviction to lift share price, and the fact that Nordic's current 6-month VWAP remains more than 10% below target, augurs a potential upside of 10% or more for the stock.
Close to 40% of the 530 Mainboard listed stocks are currently trading at less than 20 cents. The local market sentiment may well be boosted by corporate action to comply with the MTP rule.
Nordic stands out from other companies in the strong performances of its historical share price and earnings. Since the beginning of 2014, the FTSE ST Oil & Gas Index has plunged by close to 40% while Nordic’s share price soared by 70%.
Nordic is a leading automation systems integration solutions provider in Asia ex-Japan for seagoing vessels. Over 60% of white-listed PRC shipyards are its clients. Group revenue CAGR was 13.3% over the past 3 financial years, with consistent growth each year.
Group revenue reached S$72.2 million in FY2014. Net profit margin also remained stable at 8% to 11%. Net gearing is healthy, at 0.09 as at 30 June.
That is how the Group has been able to increase its dividend payout ratio from 16% in FY2013 to 40% this year.
Austin Energy fabrication workshop. Photo by Sim Kih
The Group sustains its earnings momentum by acquiring synergistic businesses that enhance its range of products and services, enable it to foray into new markets as well as strengthen its existing customer base.
It acquired Multiheight Group in 2011, one of the top 3 scaffolding services contractors in Singapore.
In June this year, it completed the acquisition of Austin Energy (Asia) Pte Ltd, which specialises in insulation and passive fireproofing services. The acquisition of Austin enabled the Group to enter the pharmaceuticals industry and offer scaffolding services with insulation as a one-stop solutions.
Nordic had an order book of S$46.1 million as at July 2015.
Box for insulation of a vessel valve, fabricated by Austin Energy. L-R: FPR consultant Colin Lum, CLSA analyst Jessalyn Wong and Austin manager Pradhu. Photo by Sim Kih
Metal sheets are cut into shape for the valve box using a computerised numerical cutter.
Photo by Sim Kih
A technician keys in dimensions for the required valve box. Photo by Sim Kih