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Singapore’s Big Winner for the Week

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SBI Offshore Limited (SGX: 5PL) has jumped by 27% since last Friday’s close to end Thursday at S$0.16. With Singapore’s broader market, as represented by the Straits Times Index (SGX: ^STI), moving up by 0.3%, SBI Offshore has certainly been a big winner in the market here this week.

The firm, which was formed in 1996, provides “offshore engineering and equipment solutions, steel fabrication, equipment manufacturing and distribution of specialised equipment to the offshore and marine industry.”

On 19 August 2014, SBI Offshore announced that it had secured a US$24 million contract to design and engineer a jack-up drilling rig which can operate in water depths of up to 110 metres. SBI Offshore had entered into the contract  with a consortium of six parties from Middle East and China and work is expected to start during the second half of this year.

Mr. Chan Lai Thong, Executive Chairman of SBI Offshore, commented on the contract win:

“The design and engineering contract is significant as it underscores our ability to move up the value chain and secure higher-value projects in new markets. We are confident that it will augur opportunities for drilling equipment and our own entry as a specialist player in large-scale mainstream oil and gas projects.”

Meanwhile, for the first half of 2014, the offshore engineering outfit announced revenue of US$7.9 million, a 75% plunge compared to a year ago. Last year, the company had recognised revenue of almost US$30 million from a major engineering, procurement, construction and commissioning project for a Malaysian client..

Despite the huge drop in turnover, net profit came in at US$429,000, a rise of 11% from the previous year. This was on the back of a 57% year-on-year increase to US$143,000 in SBI Offshore’s share of profits contributed by its 35%-owned associate, Jiangyin Neptune Marine Appliance Co., Ltd.

SBI Offshore ended the first half of 2014 with a robust balance sheet – it has a net cash position of US$5.3 million as of 30 June 2014. The company is currently trading at 22 times its trailing earnings.

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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 Sudhan P doesn’t own shares in any companies mentioned.