Tan Boy Tee's (above) investment vehicle, Bestford, is managed by former Kim Eng research head, Sebastian Heng.
It announced this evening after the market closed that two local tycoons who made their money in the marine & offshore industry were among the investors in its recent S$95 million placement exercise.
Mr Tan Boy Tee, who founded Labroy Marine, and Mr Tan Kim Seng, who founded KS Energy, took stakes in Otto at 43.2 cents per share, or a 9.83% discount to Otto’s market price when the placement was announced.
Smart money has its following. Analysts became interested in the stock after market rumors surfaced that the two prominent businessmen were in the stock.
Kim Eng Research and Phillip Securities initiated coverage on the stock just last month.
Taking into account DMG's upgrade, the consensus target price is now 63.7 cents, translating to a 35.5% upside based on today's close price of 47 cents.
Otto Marine is one of the five major Anchor Handling Tug Supply (AHTS) players globally and has one of the largest shipyards in Batam, with modern facilities and low infrastructure and labor costs.
Other than building and repairing anchor handlers, it also constructs complex platform supply vessels (PSVs) and offshore construction vessels, with a level of sophistication suitable for operations in the harsh North Sea.
There is a short term overhang caused by a supply glut in the numbers of deliveries expected of offshore support vessels (OSVs) globally, particularly the smaller vessels.
This may continue to depress vessel pricing and charter rates in certain segments, so Otto wants to build larger and higher specification OSVs that are currently still in strong demand.
Shipbuilding contributed 95.3% to Otto’s top line for the first 9 months of 2009, but the vessel builder wants to expand its ship chartering revenue contribution to 30% to 35% in 2010.
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Reflect won a contract from the New Zealand government to operate a seismic vessel in New Zealand’s new frontier basins for US$10m in Nov, and another US$3.9m contract last month from OMV New Zealand to conduct 2D seismic survey off the southeast of the South Island of New Zealand.
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Comments
The stock is now trading at 8 cents four years on. Talk about an investment gone awry..