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Vallianz Starts The Year With A Bang

Vallianz Holdings (SGX: 545) is a vessel and offshore asset owner and lessor. Its main services include chartering, brokering, vessel management and marine marketing services. It is an associate company of Swiber Holdings (SGX: AK3). Vallianz announced its first quarter earnings on 7th May 2014.

Operating Result

It recorded revenue of USD 27.7million, which is a staggering 916% higher than last year. This is mainly due to its charter revenue which contributes 89% of the total group’s revenue. The company achieved a gross profit of USD 10.33million which is 338% greater than last year. The improvement is mainly coming from its subsidairy, Rawabi Swiber Offshore Services Co (RSOS). Its administrative and interest cost saw a huge increase as well, following the surge in revenue.

The group currently has a net debt to equity ratio of 295% which can be considered as one of the highest geared offshore service company listed in Singapore. Over the quarter, the company raised more than USD 170million through new loans, issuing of new shares and redeemable convertible capital securities. The capital raised is mainly used to acquire more vessels for its business.

Going Forward

Vallianz currently operates in Asia Pacific, Middle East and in Latin America. Its customer base is mainly large oil majors and national oil companies. The management believes that the growth prospect of its business is favourable. They expect that oil prices will maintain at a high level, providing support for more exploration and production capital expenditure. Vallianz has been aggressively marketing its services to a wider customer base and expanding on its fleet. The company currently has 28 vessels in its fleet and plan to bring the number up to 50 vessels by 2016. The company is optimistic on the prospect in the region it is operating in. On top of that, it is preparing to enter into new markets, such as West Africa.

Foolish Bottom Line

Vallianz closed on the trading day of 7th May 2014 at S$ 0.144. The market is still valuing Vallianz at more than 3 times book value. With its current balance sheet, Vallianz cannot really afford a slowdown in the offshore support industry.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.