Singapore Corporate News - 16 Aug 2007

C2O to enter offshore and marine business

INFOCOMM products distributor C2O Holdings has received an injection of capital from three investors and plans to enter offshore and marine businesses.

The company is issuing a total of 162 million new shares to Tan Dah Ching, Robert Chua Swee Chong and Vivian Cheong Mei Lin at eight cents a share.

It is also placing 37.96 million new shares through Kim Eng Capital at the same price and allotting 7.5 million new shares to Chow Wai Keong for 'his services and fees in introducing the investors'.

When the exercise is completed, the subscription and placement stock will comprise 67.63 per cent of C2O's enlarged share capital. The three investors will hold 54.79 per cent.

Among other things, the issue is conditional on approval from the Singapore Exchange (SGX).

C2O said it will tap the expertise of the investors and use the proceeds from the issue to seek opportunities in the marine, offshore oil-and-gas, and petrochemical sectors.

CWT looking to go global starting with China

CWT Ltd, the largest logistics player in Singapore, is looking for rapid global expansion by replicating its logistics business model in Singapore in other hub cities across the world starting with China, said group CEO Loi Pok Yen.

He said there will be a 'real boost in the next two to three years' in CWT's financial performance, as a result of the groundwork the group has been laying in its chosen geographical and sector niches.

'We want to build a global network with depth. . . We will concentrate on niches, either by geography or by (industry) verticals, and seek to dominate that niche,' Mr Loi told BT. This is what it has done in Singapore, where it is one of the leading players in chemicals, commodities, marine engineering, auto-parts and container logistics.

CWT is, according to Mr Loi, the largest logistics player in Singapore in terms of profit, revenue and assets. It has about 3.1 million sq ft of warehouse space in Singapore with an additional 1.6 million sq ft coming on stream by the first half of 2008. And new hubs will be the Chinese cities of Tianjin and Shanghai, with the former designated as CWT's headquarters in the country.

'In Shanghai, I feel we are a little late - early enough to get a good foothold, but not enough to dominate the market. Tianjin, we arrived just at a good time, just as the business cycle was picking up,' said Mr Loi.

CWT is already responsible for 30 per cent of all the LCL cargo that goes in and out of the Tianjin port.

It is already gearing up for rapid expansion in both cities with two new warehouses. The 1.2 million sq ft warehouse in Tianjin will be ready by the end of next year, while the second phase of its 178,616 sq ft warehouse in Shanghai will be ready by the fourth quarter of this year. Mr Loi expects CWT's China-booked business to increase to about a third of group revenue (from 20 per cent in Q2 2007) within one year.

Business from China actually contributed closer to 50 per cent of group revenue in Q2 2007, but a lot of this business was booked in Singapore, said Mr Loi.

CWT's Singapore operations have enjoyed spillover business from China and India. 'And we think that will continue for at least the next five years.'

But Singapore is too far from North Asia for business from that region to be channelled through here. Hence, the need for CWT to have hubs in China.

India is another big economy where CWT is ramping up its activities. As with China, it already has a complete network of offices in India under its freight forwarding division - CWT Globelink.

'And the next step will be to capitalise on that with further investments in infrastructure,' said Mr Loi.

It is exploring opportunities in India within niches such as chemicals and cold chain logistics.

These two, along with commodity logistics, are in fact the business segments with the 'most upside potential' for CWT.

The chemicals and commodity logistics businesses are 'easily scalable'. 'So these two, we will be building up quickly within one year,' said Mr Loi.

As for cold chain logistics, the expansion will take longer as it is not easy to find ready-built cold storage facilities, unlike for other type of logistics business. Therefore, CWT is looking to build its own facilities in countries such as India, as well as Vietnam once it has obtained land, just like it has done so in Singapore.

The 330,000 sq ft of space in its new CWT Cold Hub on Fishery Port Road is expected to be fully taken up by the end of the year.

CWT's logistics businesses contributed to 32 per cent of group revenue of $121.6 million for the three months ended June 30. In terms of net profit, the segment accounted for 68 per cent of total net profit of $8.7 million for the quarter. CWT's engineering maintenance and freight forwarding businesses accounted for 9 per cent and 23 per cent of net profit respectively.

CWT's Q2 2007 revenue and net profit had jumped 61 per cent and 162 per cent over the corresponding period a year ago.

With a cash position of about $56 million as at June 30, the group, said Mr Loi, is in a good position to 'pick up whatever we feel is a decent bargain'.

Right now, the group has a 'couple of things on the table' in terms of potential acquisitions. Acquisitions, in addition to organic growth, is an important way for CWT to expand further, and the group is always on the lookout for potential targets, said Mr Loi.