BTP:SG – Baker Technology

[mjohn707]

Baker Technology is a Singapore listed company that is engaged in various aspects of the marine offshore business.  As of 3Q17 the company is reporting an 85% decrease in revenue year over year over already weak 2016 numbers, and significant and increasing operating losses.  In addition, the company began constructing a liftboat around the time of peak oil prices, sinking something like 100M SGD or about 50% of the company’s net worth into it.  This is the first liftboat the company has ever constructed, which probably has certain risks over and above the risk in marketing this asset into what is likely to be a weak market for offshore oil assets.

 

Despite these issues, I think the company is a reasonable investment at current prices using a basket approach with a similarly situated group of statistical bargins due to the company’s large cash balances, lack of debt, low level of liabilities, and recent news in relation to the liftboat asset, and other management initiatives.

 

Against the current market value of 130M SGD the company has cash and investment balances of 93M SGD and total liabilities of only 4M SGD.  In addition, the company announced on Feb. 12th that it has secured a time charter for its liftboat, which will be deployed in Southeast Asia for a national oil company.  Management is also considering a 25M-50M SGD investment in in a distressed offshore oil company.

 

Management has a history of paying dividends.  The risk with this name is that management seems to be the wheeler-dealer type and one or both of their initiatives might not pan out.  This is the sort of thing that might go either way probably, but at current prices you have the odds in your favor. 

 

I’m attaching a copy of a spreadsheet with a 10-year summary of the company’s income and balance sheets.

 

Current Price:  0.640 SGD

Market Cap:  130M SGD

P/E:  N/A

P/B:  60%

P/NCAV:  70%

Baker_Technology_1.xlsx