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Singapore's Sinwa to expand offshore business
SINGAPORE, April 19 (Reuters) - Singapore's Sinwa Ltd., which supplies marine equipment to
clients including Royal Dutch
Shell Plc <RDSa.L> and BP Plc <BP.L>,
said it sees double-digit growth
in 2007 net profit and plans to
expand its offshore business.
Sinwa <SINW.SI>, which provides
equipment such as crane wires
and anchor chains, said its 2007
net profit would beat brokerage
Kim Eng Securities' forecast of
S$7.9 million.
Kim Eng's forecast represents a
3.9 percent increase on Sinwa's
2006 net profit of S$7.6
million.
"I am more optimistic than
that," Chief Executive Officer
Mike Sim told Reuters on
Thursday, referring to Kim Eng's
forecast for 2007 net profit.
Dealers said there has been some
speculation that Sinwa, which
has a stock market value of
almost US$80 million, could be a
takeover target.
Sim owns about 42 percent of the
company, which was listed in
2003. He said he was open to
takeover offers.
"If somebody comes to me and
says, 'let's talk', then we'll
talk. But that somebody must
enhance shareholder value," he
said.
"The market is being
consolidated right now. There
used to be 200-250 players in
the supply field, and at the
moment, there's 150-180 players.
And of the 150, there are no
more than 30 main players" in
Singapore, said 63-year-old Sim,
who bought the business from his
father in 1987.
OFFSHORE EXPANSION
Sinwa's offshore operations
currently make up 35 percent of
its business. Sim said he plans
to raise this to 50 percent in
the next five years as the firm
pursues more contracts to build
rigs and charter vessels to
offshore players.
Sim expects the oil-and-gas
sector boom to continue for at
least seven years, on the back
of higher oil prices.
On Thursday, the company said it
had won a contract worth US$40.5
million to charter a seismic
vessel -- used in oil
exploration -- for three years,
through a joint venture with
Norway's Nordic International.
The charter will begin in the
second half of 2007, it said.
In September 2006, Sinwa entered
a joint venture with KS Energy
Services <KSTL.SI> to build, own
and charter a rig in a deal
worth about US$109.5 million
over five years. KS Energy is a
rigs refurbisher controlled by
Indonesian tycoon Kris Wiluan.
Sim told Reuters on Thursday
that he is in talks with
potential investors to take a
majority stake in a Vietnamese
joint venture, and is
negotiating to secure more
offshore contracts. He declined
to give details.
Sinwa's shares trade at 18 times
its forward earnings. Sector
peer Ezra Holdings <EZRA.SI>
trades at 23.6 times, while
Swissco International <SWIS.SI>
trades at 14.6 times.
((Reporting by Jamie Lee and
Sebastian Tong, editing by Sara
Webb/David Cowell,
jamiewl.lee@reuters.com,
Reuters Messaging:
jamiewl.lee.reuters.com@reuters.net,
+65 6403 5667))
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