IN TODAY’S final report of a three-part series on Financial PR’s road show last week, we highlight how some listed companies stay nimble in what appears to be a tough environment.
Here is a summary of opportunities in welding works, rubber plantation and the travel industry.
Leeden
Welding works may not sound sexy but Leeden’s CEO Mr Steven Tham and its COO Mr Kelvin Lee shared with investors at the conference some pretty innovative expansion plans.
Leeden is the market leader in Singapore, Malaysia and Batam for providing welding works integrated with gas and safety solutions.
Its revenues are driven by the current peak in ship building, but the authorized distributor for top brands of welding, gas and safety equipment has been thinking ahead on how to move in a downturn.
”Our Malaysian experience will help when we foray into the Middle East,” said its chief operating officer and executive director Kelvin Lee at Financial PR’s investor conference.
FY08 revenues from subsidiaries in Malaysia and other countries outside Singapore had jumped three to fourfold year-on-year to S$51.1 million after Leeden made several acquisitions in Malaysia. These countries contributed about one third to its FY08 top line.
I was impressed by the company’s foresight in tapping on manpower familiar with Islamic commercial culture to open up new markets.
Another strategy it has adopted was to introduce proprietary brands at mid-range prices but with quality comparable to the top brand names.
Not only did this improve margins, the products have proven popular as a result of the challenging economic outlook.
Marine & offshore / oil & gas customers have always been fussy about quality, but Leeden’s reputation for top-of-the-range equipment has helped when the company pushed out mid-ranged products, said the management.
Related story:
| 27 Feb 2009 | LEEDEN: A galloping profit workhorse |
GMG Global
Photo by Sim Kih
”Now is the time to conserve cash and look out for opportunities to buy land bank and processing plants at depressed asset values.”
This was CEO Elson Ng’s reply when an investor he met at Financial PR’s conference asked whether GMG was going to raise dividend payout given its strong cash flow.
The company’s FY08 cash flow from operations had more than doubled year-on-year to S$61.9 million and was sitting on net cash reserves of S$67.6 million as at 31 Dec 2008.
GMG has interests in 42,560 hectares of rubber plantations in Africa and benefited from strong rubber prices last year.
The rubber boom helped lift its FY08 revenues by 47.6% yoy to reach S$245.6 million and its net earnings surged 77.7% to reach S$48.5 million.
Photo by Sim Kih
However, distress in the North American auto industry and the global economic slowdown has adversely affected demand for tyres in recent months. Prices plunged sharply during 4Q08 and now hover below US$1,500 a ton.
While some investors believe that 2008 rubber prices were a bubble, Mr Ng has other opinions. He points out two indicators for investors to chew on:
Firstly, while rubber prices have doubled over the past decade, gold (to which currencies used to be pegged) has multiplied nearly fourfold.
Secondly, farmers’ wages are still dismally depressed. Mr Ng believes that as world civilization progresses, the rise of agricultural wages will eventually push up soft commodity prices.
Related stories:
| 20 Nov 2008 | GMG: Working on a 3-year China strategy |
Westminster Travel
Have you visited any of the flurry of travel fairs in recent months? Airfares have come down 20%-30% compared to the same time last year and hotels are lowering room rates.
What this means for travel agency Westminster is more support from airlines and hotels as well more opportunities for joint venture promos, according to Henry Chu, its finance director.
The plan is to offer more package deals incorporating a full spectrum of corporate travel needs, including leisure and MICE services.
Westminster is Hong Kong's leading travel agent and has about 2,700 corporate customers from diverse industries.
There are about 1,500 travel agents in Hong Kong but less than 10 are air ticket consolidators like Westminster, who procures tickets in bulk from airlines and distributes them piece-meal to the smaller travel agents.
Besides representing 77 airlines, it also makes booking arrangements on behalf of over 30,000 hotels worldwide.
Westminster listed on Catalist on 23 Jan 2009 by placing 43 million shares at 23.5 cents each.
Related story: WESTMINSTER: Leading HK travel agency is first 2009 IPO
