Wednesday, 19 March 2014

Vallianz Holdings - More Growth to Come?

Vallianz Holdings, a subsidiary of Swiber had been growing exponentially since Sep last year from 5c to peak of 20c and now hovering around 15c. 300% increase! 

This counter had been stagnant under Anders Schau as CEO since 2010 to 2012 after the RTO from Enzer. Since the appointment of Darren Yeo, who is also director and a major shareholder in Swiber, the stock had pick up pace with several announcements including JV with Saudi Arabia Rawabi and option agreement with Swiber. FY2013 results showed a 88% increase in earnings to US$10.3M with a backlog order of US$470M. 


Announced appointment of Executive Director Ling Yong Wah yesterday. His background is from private equity firm which focused on expansion capital and mid-market buyouts. 

With the new appointment, will there be more expansion moves to come??? 


Positive
  • Strong fundamentals in offshore sector stem from more than 200 delivery of Jackups in coming years
  • Strong order book of >S$500M
  • To expand fleet of vessels from 26 to 50 by 2016.
  • Strong backing from Swiber who has extensive network in S.E.A, India, Middle East & Mexico assisting Vallianz to get more contracts.
  • Management has sufficient experience weathering through the 2008-09 crisis.
  • Management is young at average age below 50 years old.
  • Management has track record of growing a stock and sell it, as seen in Kruez Holdings.
  • ROE ~ 17%, ROA ~ 5%
Negative
  • High debt of US$69m. 54M is term loan for vessels. 
  • Current Ratio = 0.64
  • If another crisis like 2009 hit again, high debt asset owning nature business will be affected seriously
  • Pathetic low dividend of 0.3%
  • Expansion means hiring of experienced people, which is already scarce in the market.


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