SINGAPORE (Oct 21): Specialist engineering company Starburst Holdings has been steadily buying back shares over the past fortnight. In its most recent purchase on Oct 15, the company bought 80,000 shares at between 37 and 38 cents apiece, bringing its total treasury share holdings to 9.83 million.
This follows its purchase of 40,000 shares on Oct 7, also in a similar price range. Prior to this, the company bought a total of 146,600 shares on Sept 24 and another 20,000 shares the following day. The shares were bought at between 36.5 and 37.5 cents.
Year to date, Starburst’s share price remains unchanged, closing at 38 cents on Oct 17. This values the company at $92 million.
The Singapore-headquartered company specialises in the design and engineering of firearms-training facilities, anti-ricochet ballistic protection systems and tactical training mock-ups for law enforcement, military and security agencies in Southeast Asia and the Middle East. It launched its IPO on the Catalist board in July 2013 at a share price of 31 cents each.
Starburst’s recent share buybacks come after a six-month hiatus. It bought a total of 230,300 shares at 38 cents each on Feb 27, March 5 and March 8. They were its first buybacks this year.
For the second quarter ended June 30, the company reported losses of $892,000, 32.4% lower than the $1.32 million recorded in 2QFY2018. This was on the back of a 28.2% increase in revenue to $1.9 million, as a result of higher maintenance and ad-hoc works from both new and existing customers. This translated into losses per share of 0.37 cent for the quarter, up 31.2% from 0.54 cent in the previous year.
On May 14, Starburst announced it had been awarded a $3.6 million contract to design, supply and install an underwater training facility in Southeast Asia. Construction began in May and is slated for completion in April 2020.
Overall, Starburst incurred losses of $2.1 million in the first half of the year — 20.4% lower than losses of $2.6 million in 1HFY2018. This was on the back of a 14.8% y-o-y increase in revenue to $3.5 million as well as a 76.6% y-o-y reduction in project and production costs to $45,000. This implied losses per share of 0.86 cent for the period, up 24% from 0.107 cent in 1H2018.
Executive chairman Edward Lim says Starburst’s earnings are resilient and that it will “focus on a recurring income stream through an expansion of [its] portfolio of maintenance services contracts and keeping a tight watch on cost containment measures”. Going forward, the company is poised to capitalise on the opportunities presented by rising geopolitical and geo-economic tensions, says Lim.
Lim’s optimism is driven by higher overall spending on defence and security. IHS Markit sees military expenditure in the Middle East alone hitting US$110.86 billion ($152 billion) in 2023. The Stockholm International Peace Research Institute, meanwhile, expects Southeast Asia’s current military expenditure, which amounts to U$41.9 billion, to increase, amid territorial disputes and military modernisations.
Jonathan Yap, Starburst’s managing director, says the company will “continually strengthen [its] partnerships with defence contractors, equipment suppliers and consultants, and participate in joint tenders and collaborations”.
He adds that the level of enquiry from “law enforcing authorities and the military, in [the markets it is present in]” is an indication that Starburst may secure more contracts in the year ahead.
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