Some people buy rundown houses to refurbish them and then sell them at a profit. Singapore offshore player King Heng does the same thing, but with ships.
The Singapore-listed company has just raided the secondhand bargain basement with the acquisition of nine offshore support vessels for the sum of just $9.3m.
The acquisitions were made by 49%-owned indirect subsidiary Ruhm Mazu Sdn Bhd, the company said in a regulatory filing.
The nine vessels consist of one 400-passenger accommodation barge, one special service offshore support vessel, four anchor handling tug supply vessels and three offshore support vessels.
Kim Heng said the acquisition is part of its strategy to pick up ships cheaply and then refurbish them at its two shipyards.
The company said it then decides to either sell them on to a customer for a profit or fix the vessels out to generate charter revenue.
“With the acquisition, the group will be able to position and meet the growing demands from the marine and offshore and the renewables sector,” Kim Heng said.
The Thomas Tan-led company said the acquisitions will be funded by a combination of internal resources and bank borrowings.
Separately, on Friday, the company reported a return to profit for the full-year. This reversed a loss from 12 months ago, despite a weaker performance at its renewable arm.
Kim Heng made a profit of SGD 8.6m ($6.4m) against a net loss of SGD 5.1m 12 months earlier, according to a regulatory filing.
Revenue for the year was up 26% to SGD 79.8m, while costs rose just 10% to SGD 52.1m. The company also booked income from asset disposals of SGD 7.5m.
Most of Kim Heng’s business segments reported year-on-year increases in revenue, with the exception of its renewable energy arm.
Revenue in this segment decreased by SGD 8.1m, or 45%, from SGD 17.9m a year ago, mainly due to fewer contracts secured in the offshore windfarm projects in Taiwan.
Looking ahead, Kim Heng said it was optimistic about the prospects for the offshore segment of its business due to various factors.
“The current situation of a limited supply of available vessels and rigs, coupled with significantly improved demand for such vessels, which is expected to be robust due to a lack of investment in the past several years, translates into greater demand for our services and offshore assets,” the company said.
“Simultaneously, with high oil prices and tight global supply, the move towards renewables continue unabated.
“We are therefore also optimistic with this sector of our business.”
