Kim Heng

[specuvestor]

Agree that the project win and the loan is attestation of their execution even before this oil recovery

Rather low profile oil & gas company that I only met once before the industry unraveled

[weijian]

Unlike some O&G companies that went belly up during the last few years due to the oil crisis, Kim Heng has managed to survive. Of course, its cash level is also depleting. So far, it has tap on bank credit, and now selling property to meet its capital needs, instead of issuing shares thru placement and/or right issues. What’s the logic? Probable has to attend the EGM to find out more.

I noticed that a PE fund (seeded in 2012) is a pre IPO investor. They are still holding onto ~17.6% of the company.

I would think issuing placement/rights would have been the right way to go, ie. the route as Sembcorp Marine did (even though SCM had much higher gearing to start with)

My best explanation would be the PE fund rejecting any form of fund raising through equity (they have a representation on the BOD). It is good to have someone on the BOD "looking after" OPMI's rights after all.

[dydx]

Do take a close look at the 1H results especially the B/S..
https://links.sgx.com/FileOpen/KHL%20-%2...eID=678999

Financially Kim Heng appears still trying to survive, and yet based on the recent announcements on new major projects and capex, management is pushing for rapid growth. For that, the company would probably need new capital.

[weijian]

hi dydx,

Kim Heng tried to sell 1 of its 2 yards last year but it did not materialize. So yes, there will probably be some fund raising via equity soon.

But the point I want is to say is that it is not a question of "IF" but "HOW and WHEN". The cost of equity would be very high, as from 2020 to mid 2021, its share price was way below NAV and any rights/placement would have to be done at even deeper discounts.

With a high oil price and the chest beating war cries into the renewable energy sector, any rights/placement issue would have lower cost of equity moving forward. While I can't prove it directly but I do suspect that having a private equity fund as a substantial shareholder and then represented on the BOD, has indirectly aided OPMIs.

[Ben]

https://www.theedgesingapore.com/news/de...cs-capital

I believe Credence Capital is a pre IPO investor in Kim Heng. By divesting their stake at $0.105, are they in the money already?

More importantly, Hildrics Capital must have done their sum and bought at $0.105. If we just assume that Hildrics Capital has a target of 20% gain, that would give a target price of $0.105*1.2=$0.126. Is that reasonable?

Interesting to see if KH has managed to turn around when they announce their 1H results.

[Vseeker]

https://www.theedgesingapore.com/news/de...cs-capital

I believe Credence Capital is a pre IPO investor in Kim Heng. By divesting their stake at $0.105, are they in the money already?

More importantly, Hildrics Capital must have done their sum and bought at $0.105. If we just assume that Hildrics Capital has a target of 20% gain, that would give a target price of $0.105*1.2=$0.126. Is that reasonable?

Interesting to see if KH has managed to turn around when they announce their 1H results.

Their pre-IPO costs was $25m or $0.20 pShr.
KimHeng payout divs for 5yrs from 2014 to 2018, 
total DIVs from all 5yrs added up = only $0.0144 pShr

No vestings.

[opmi]

https://www.theedgesingapore.com/news/de...cs-capital

I believe Credence Capital is a pre IPO investor in Kim Heng. By divesting their stake at $0.105, are they in the money already?

More importantly, Hildrics Capital must have done their sum and bought at $0.105. If we just assume that Hildrics Capital has a target of 20% gain, that would give a target price of $0.105*1.2=$0.126. Is that reasonable?

Interesting to see if KH has managed to turn around when they announce their 1H results.

20% target pa more likely.  Can guess what Hildrics will do - Refinancing/ Acq / Charter-in

[weijian]

Revenue/gross profit for 1H22 is actually lower than 2H21. Is there a halt in progress of the recovery? Nonetheless, other expenses (inventories obsolescence and receivables impairment) seems to continue to improve.

After stripping out the gains from its PPE disposal (recognized a 6.1mil gain on net proceeds of 9.45mil), it continues to register a net loss for the half. From the gains from PPE disposal, the company has demonstrated that it is worth more dead than alive. It is a typical company that value investors would be interested in.

But of course, this company will not buy its own death certificate because the founders are around and many of them are still working in the company (drawing ~1.5-2mil per annum). But from its PPE sales, I reckon it is not exactly hard to form some basis for its intrinsic value.

INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2022

1H22 results: https://links.sgx.com/FileOpen/SGX_Annou...eID=727551