SINGAPORE (Nov 2): SAC Advisors likes Kim Heng Offshore & Marine Holdings for its established brand name and management team plus strong balance sheet.
Kim Heng is an established integrated offshore and marine value chain services provider. The group offers a one-stop range of products and services that caters to different stages of offshore oil and gas projects from oil exploration to field development and oil production.
In a Thursday non-rated research note, SAC analyst Terence Chua says the group has a tracj record of over 40 years and an experienced management team.
“This was demonstrated by the strategic decision undertaken by management in 2014 to prudently manage their cash resources when they anticipated that the market would correct as it was flushed with an oversupply of assets,” says Chua.
Management had also taken the active decision to avoid over-leveraging their balance sheet despite many of their peers taking on additional debt to invest.
The company’s prudent management of their balance sheet have seen them maintain a net debt to equity of 21.3% in the latest 2Q18.
The company also has about $7 million in IPO proceeds that have not been utilised.
The group has also secured a five-year vessel loan of $5 million which they secured from UOB and will be available to be drawn down in 3Q18.
These moves ensure that the group remains in a favourable position to take advantage of good M&A opportunities that come their way, says Chua.
Shares in Kim Heng are trading at 10.3 cents or 0.8 times FY16 book value. The stock has a market cap of $73.8 million.
