There is a Maritime Show Exhibition this week in MBS and I visited it. Met a lot of familiar faces and receive a reliable insider news with regards to Baker Technology Limited.
Baker Tech is founded by Benety Chang, who use to be the deputy Chairman of PPL shipyard. He is also the brother of Brian Chang, who in Singapore, we name him as “Father of Jackup Rig” , i.e. pioneer in Jack up rig business. After PPL which is now a subsidiary of Sembcorp, Brian started Yantai Raffles before he dispose his shares to China CIMC.
Baker Tech primary business is supplier of Jackup Legs (- few competitors in the world), Jacking system, Cranes, Winches, Skidding System, Fabrication etc which primary are built in its subsidiary Sea Deep Shipyard. Majority of its
Dividends / Cash
Baker Tech announce dividends of 16% for FY2013, and have a cash of >S$200M = 23.6cents per share considering its price at 31c. The cash mainly comes from its disposal of investment in Discover Offshore Rig. Note the company also have almost no debt.
Core Business Profit
If you analyse Baker Tech Core business profit excluding the disposals over the past years, their profit of core business is actually between SGD12-15M. Meaning at 270M market cap, PE of core business is relatively high.
To stay in growing mode, the company must continue to have profitable investment outside their core business, which is why they had set up BT invest recently and appoint a new MD whose background is in investment rather than oil and gas.
Most possible investment is ownership of stake in Rigs, since that is what the CEO is most familiar with.
Baker tech is re-organizing its internal organisation structure now. They are also involve in preparation of a big project now utilizing all the cash muscle they possess. However return is not expected in the near term.
In near term, business prospects are very challenging as margin in china which is their core market is getting thinner in view of competitive business outlook. Also there does not exist any more potential divestment that can increase its bottom line as compared to FY2013 and 12. Near Term short!
2 Years Later 2016
The potential is coming in 2016. Near term, investor please continue to get your lucrative dividends for FY2013. FY2014 and 2015 is definitely not so promising for the company.
2016 onwards if there is no major crisis, we can expect some good growth in share price.
Long Term …. Long