Oceanus Exits Watchlist, Eyes Fundraising as It Gears Up for Ventures in Food Security
Oceanus Group, finally released from the Singapore Exchange (SGX) Watchlist after six years, is gearing up to execute growth plans that will see it becoming a key regional player in the critical business of food supply and security.
Oceanus, as an abalone farmer, was brought to its knees after the bulk of its then abalone stock died. Exiting from the watchlist is a clear indication the company has put that part of the chapter behind.
In February, the company managed to report a full-year net profit of 58.6 million for FY2020 ended December 2020, but the exit from the watchlist was nowhere in sight for months.
On Aug 12, Oceanus reported 1HFY2O21 earnings of 54.97 million, up 597’\’ y-o-y, further extending its record of staying in the black — and the exit was finally official more than a month later.
The way CEO Peter Koh sees it, there is a concern if the earnings reported by the company will be a one-off.
After all, Koh spent years cleaning up the company, restructuring and rebuilding before revenue and earnings returned. “If we’re going back down, it’s going to look bad on everybody,” Koh said in an interview on Sept 29.
“I guess we managed to convince SGX and prove to them that this is just the beginning, that’s why it took longer than expected.”
In reaction to the watchlist announcement, Oceanus shares on Sept 29 surged 1T.65% to close at4 cents. The following day, it crept up further to close at4.1 cents. The stock was the most heavily traded on both days.
Now, with whatever overhang from the watchlist out of the way, Oceanus is gearing up to execute its growth plans, which, naturally, requires more capital, and to which Koh readily says fundraising is on the agenda.
While the actual mechanics of raising new funds has yet to be determined, Koh says the company is enjoying the support of its key shareholders, including the single largest shareholder at 14.59% — Alacrity Investment Group, controlled by an Indonesian family.
Koh says that the company also has quite a number of “very strategic” shareholders who has not just put in the capital but can also benefit Oceanus with their networks or potential collaborations with other businesses they have interest in.
“They will be working with the company in the long run to see how we can develop it,” says Koh, adding that the new funds to be raised will be allocated across the various businesses.
For 1HFYI021 ended June 30, the company recorded earnings of 54.97 million, up 59T% y-o-y, with the bulk of it contributed by favourable foreign exchange gains. Revenue in the same period was up 553% y-o-y to t52.5 million, with the distribution business accounting for the dominant proportion at 550.8 million.
Other business activities include investments in high-tech seafood farming and also a multimedia production arm, which is involved in projects such as the recent National Day’s Parade.
According to Duane Ho, the company’s group CFO, with the distribution platform growing and bringing home more resources, it can help “turbocharge” the smaller divisions and speed up their meaningful contributions to Oceanus’ overall bottomline in the coming year or so. F’That’s all entirely part of the strategy that we have in mind,” says Ho.
Sino Food JV
Oceanus is relatively new to the distribution business. It was formed just over a year ago but has generated a certain growth momentum, giving the company the appetite to do more.
On Aug 23, Oceanus announced it has formed a new joint venture in China to be a wholesaler of foodstuffs and beverages. Sino Food Group, as the JV is called, is 60% held by Seasons Global Trading, the trading and distribution subsidiary of Oceanus.
It has three local partners: 30% is held by one Lin Jiadong, whom Oceanus says has nearly a decade of experience in the fast-moving consumer goods and frozen meat industry, as well as trade financing in the China Construction Bank and Industrial Bank.
More recently, Lin manages trade volumes of over 300 containers per month, with a procurement value of some RMB150 million (t31.28 million) per month.
The two other local shareholders are: Guo Zhida and Huang Wentao, fund managers and directors of Shenzhen Jiurun Trading and holding 5% each.
According to Oceanus, Sino Food Group, which already has in place a network of around 200 frozen food exporters from Europe, North and South America, has been appointed as an approved distributor of China Resources Wufeng, a food enterprise group under China Resources (Group), a state-owned enterprise (SOE) of China and one of the Fortune Global 500 companies.
In addition, the joint venture has lined up some backing from a consortium of Chinese SOEs and the trade financiers such as Shenzhen Rural Commercial Bank and Guangdong Light Industry Group.
“China, being a dominant market player in Asia, offers immense potential and growth opportunities in the food supply chain sector. We are confident that Sino Food Group will bolster the global food supply chain and supplement food security in Asia,’ says Koh.
According to Koh, Oceanus, as a Singapore-listed entity, carries a level of credibility and neutrality, which makes it easier for the company to be the trading interface between different governments and companies. Relative to China-based companies, it is cheaper to borrow from banks here to fund the trading activities.
The way Koh sees it, such a business opportunity in food sourcing came about because of the pandemic, which threw supply chains into a prolonged disarray. Food security became a top agenda overnight — and for Oceanus, the new growth business to be in. “I’m a strong advocate of what (former UK prime minister) Winston Churchill says: ‘You never waste a crisis,”’ says Koh.