BH Global Marine sees growth ahead

Equipment supplier looks to extend product offering to the oil & gas market, especially the oil rig segment

By Angela Tan
Nov 15, 2005
The Business Times

BH GLOBAL Marine may be a small cap company but the supplier of marine equipment to shipyards and shipowners has big plans to expand its business beyond local yards, managing director Vincent Lim told BT yesterday.

'We are trying to venture into markets other than Singapore yards. We are looking at orders from Indonesia, Vietnam and China in the future. China is important as many European ship owners have already placed orders there but still want imported fittings,' Mr Lim said.

Such plans provide further upside to the already strong organic growth generated from its operations in Singapore - the world's busiest port, with 133,185 ship arrivals last year, representing a 5.7 per cent increase over 2003.

BH, which was listed this September, supplies marine electrical equipment like marine cables, marine lighting as well as consumables such as marine lamps to shipchandlers, shipowners, shiprepairers and yard operators.

Major customers include Labroy Marine, Sinwa Group and Jurong Shipyard. Repeat customers accounted for 75 per cent of last year's sales.

'We are very optimistic. The trend is very positive,' Mr Lim said when asked if BH can repeat its 2004 growth this year.

BH's earnings visibility is quite clear since the yards already know what projects they have until 2008 given that shipowners all over the world have already started placing their orders. For the first seven months of this year, BH has booked orders of $16.2 million, or two thirds of its 2004 revenue.

For the year ended Dec 31, 2004, BH's net profit grew 122 per cent to $6.9 million from $3.1 million a year before. Revenue grew 36 per cent to $24.6 million from $18.1 million.

Singapore accounted for 86 per cent of 2004 revenues, with the rest coming from Indonesia, Japan and Malaysia. Marine electrical equipment made up 77.5 per cent of sales while marine consumables accounted for the rest.

With more than 7,000 items already in stock, BH is now looking to widen its product offerings to target the oil and gas market. 'We are targeting specifically the oil rig segment - explosion-proof lighting and fire-retardant cables are some examples,' Mr Lim said.

The company has expanded its warehouse space from 27,000 sq ft to 70,000 sq ft after its IPO. This will allow BH to raise its stock level and product range.

'Our competitive edge is our ability to deliver immediately. If clients go to suppliers directly, the factories take six to eight weeks to deliver. Sometimes, they don't have stock. We have. We can help clients save costs - be it berthing or docking fees - with shortened delivery,' Mr Lim said.

This 'immediate' service is not limited to its Singapore clients. Clients in the Middle East also enjoy quick attention. 'We deliver within 24 hours for clients in Dubai by tying up with a freight forwarding company,' Mr Lim said.

Funding for expansion will be internally sourced. Following the IPO, BH now has about $6 million left in its coffers. Its operations are also generating cash.

Such is Mr Lim's confidence that he believes the company will not have a problem meeting its plan to pay up to 40 per cent of its net profit as dividend this year and next.

BH began in the early 1960s, when Mr Lim's late father, Lim Jee Chye, founded a business of stocking and supplying electrical cables. Today, several of Mr Lim's siblings are also on board. BH's chairman is Alvin; director of human resource and administration, Eileen; executive director of marketing and procurement, Patrick; and operations director, Johnny.

Asked how the family-run business ensures good corporate governance practice, Mr Lim said that the siblings heed their father's advice of not mixing personal agendas with those of the company. 'Actually, because BH is our own business, our commitment is 110 per cent. We work very hard without complaining,' said Mr Lim, who puts in more than 12 hours at work a day at times.

BH is a celebration of the Lim parents' legacy. Incorporating mother's and father's names in Chinese characters, BH represents 'Beng Hui', or 'forever bright' - something the Lims are working hard to ensure.