S i2i Ltd Take The Leap To Join The Green Revolution In Singapore

S i2i Ltd (SGX: BAI), a telecommunications services provider and device distributor, might be entering a new line of business.

The company has been struggling with years of losses in its business. It has been scaling back its traditional telecommunications business and has been looking for alternative revenue streams.

S i2i’s chief executive, Maneesh Tripathi, also made news in early 2015 when he announced that he will be taking a S$1 annual salary until the day the company can turn its business around.

In March this year, S i2i managed to form a partnership with Kaplan Learning Institute to provide professional training courses in Singapore. The company has displayed some positive signs of late given that it has produced profits in three consecutive quarters.

Yesterday, S i2i announced that it will be purchasing 15 all-electric cars and charging stations from BYD’s Singapore operations.

BYD is one of the leading electric cars manufacturers in China. For a bit of interesting trivia, it gained prominence amongst international investors when billionaire Warren Buffett decided to invest in the company back in 2008. Today, BYD is listed in Hong Kong with a market capitalisation of HK$128 billion (around S$22 billion). It generated sales of more than RMB85 billion (S$17 billion) over the last 12 months.

S i2i will pay S$1.1 million in total for the cars and charging stations. The purpose of the purchase is for the company to enter the electric vehicle industry in Singapore. S i2i wants to be one of the pioneers in bringing full electric vehicles to Singapore and is planning to provide distribution, sales, after-sales services, and transport services in Singapore.

The purchase will be funded internally and would have no impact on the net asset value or earnings of the company. Given that S i2i is in a net-cash position of over S$30 million as of 31 March 2016, there is not much risk for the company to venture into this new potential business.

Will S i2i succeed in becoming a strong player in the electric vehicle industry in Singapore? It is worth noting that electric vehicles are not new to our Garden City. A local taxi firm, HDT Singapore Taxi, already runs a fleet of 30 BYD cars and has plans to boost its fleet size to 100 vehicles. Moreover, the Land Transport Authority (LTA) and Economic Development Board (EDB) have plans for an island-wide electric vehicle sharing programme, with 1,000 cars and 2,000 charging points.

There appears to be a trend of Singapore’s transport fleet moving toward electric vehicles. But whether S i2i’s latest adventure with electric vehicles will be a profitable one would be up to management’s operational chops. It is still too early to tell if S i2i would be successful in this new venture, but it is likely to be a positive step forward for the company.

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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 writer Stanley Lim doesn’t own shares in any companies mentioned.