12-04-2012, 06:07 PM
Business Times
Published April 12, 2012
Civmec eyes more technologically challenging, higher value activity
SGX newbie upbeat on oil & gas industry outlook in Australia
By Ronnie Lim
AUSTRALIA'S Civmec - whose shares start trading here tomorrow - intends to go into more technologically challenging and higher value activity like structural mechanical piping (SMP) work for the oil & gas and mining industries, and is also eyeing projects beyond Western Australia, like in booming Queensland, executive chairman Jim Fitzgerald said.
But the SGX newbie is not about to rush into any of this. "For the rest of this year, we will focus on the projects we already have, building stronger relationships with existing clients and in consolidating the company after listing for the next phase," he told BT.
It intends to spend a modest $6 million from the IPO proceeds to expand its covered seafront fabrication and modular assembly facility in Henderson, near Perth - which is the country's largest - including building an earlier-planned new office there.
Civmec issued 101 million new shares at 40 Singapore cents each, with 99 million placement shares readily snapped up. A remaining public portion of 2 million shares was 34 times subscribed at the close of the issue yesterday, despite the absence of a launch advertisement. The $40.4 million raised from the IPO accounts for about 20.2 per cent of its total share capital.
Asked why the company - which does civil engineering work for "biggies" like the Gorgon LNG project there and with "blue-chip" clients including BHP Billiton and Rio Tinto - chose to list here rather than Down Under, Mr Fitzgerald said that "the foundations for the move were laid two years ago".
"We had no facility of our own then, and decided we wanted to build one. We spoke to our employees and also to some investors in Singapore and Australia about it, and received a lot of support. We were also planning acquisitions in the future possibly into Asia or Europe, making Singapore an ideal base for that."
That was when Civmec placed its first tranche of shares at 11.8 Singapore cents "based on our earnings at that particular time. Besides, the risks they (pre-IPO investors) took was quite enormous," he said.
"Six months later, when the project contracts started coming in, we placed our second tranche at 23.4 cents, as we had a bit more meat on the plate by that stage."
The latest IPO pricing of 40 cents was based on Civmec's Q1 2012 revenue of $43.7 million and net profit of $5.2 million, and also on book-building, he explained.
Civmec's entry here bears an uncanny similarity to that of competitor Ausgroup, whose Singapore IPO exactly seven years ago of 50 million placement shares with a public portion also of 2 million shares - was also well received. Coincidentally, Ausgroup's share price has been rising recently to match Civmec's at 40 cents.
Mr Fitzgerald said Ausgroup is more into SMP and engineering work, while Civmec is currently more involved in civil projects, like "building concrete caissons, or the footing, for Chevron's offshore platforms, with this nevertheless requiring high skill sets".
Apart from growing its civil engineering business, Civmec has also set its sights on building up its technological capabilities to handle SMP projects in two to three years time, he added.
Its Henderson facility near Perth currently houses 700 workers, from engineers to tradesmen like boiler-makers, and "we could go up to 800 to 1,000 from here".
He noted that the growth outlook in the next four to five years remains strong for Australia's oil & gas and mining industries with an estimated A$406 billion (S$526 billion) of projects and over half of this in Western Australia where all of Civmec's projects are currently.
Published April 12, 2012
Civmec eyes more technologically challenging, higher value activity
SGX newbie upbeat on oil & gas industry outlook in Australia
By Ronnie Lim
AUSTRALIA'S Civmec - whose shares start trading here tomorrow - intends to go into more technologically challenging and higher value activity like structural mechanical piping (SMP) work for the oil & gas and mining industries, and is also eyeing projects beyond Western Australia, like in booming Queensland, executive chairman Jim Fitzgerald said.
But the SGX newbie is not about to rush into any of this. "For the rest of this year, we will focus on the projects we already have, building stronger relationships with existing clients and in consolidating the company after listing for the next phase," he told BT.
It intends to spend a modest $6 million from the IPO proceeds to expand its covered seafront fabrication and modular assembly facility in Henderson, near Perth - which is the country's largest - including building an earlier-planned new office there.
Civmec issued 101 million new shares at 40 Singapore cents each, with 99 million placement shares readily snapped up. A remaining public portion of 2 million shares was 34 times subscribed at the close of the issue yesterday, despite the absence of a launch advertisement. The $40.4 million raised from the IPO accounts for about 20.2 per cent of its total share capital.
Asked why the company - which does civil engineering work for "biggies" like the Gorgon LNG project there and with "blue-chip" clients including BHP Billiton and Rio Tinto - chose to list here rather than Down Under, Mr Fitzgerald said that "the foundations for the move were laid two years ago".
"We had no facility of our own then, and decided we wanted to build one. We spoke to our employees and also to some investors in Singapore and Australia about it, and received a lot of support. We were also planning acquisitions in the future possibly into Asia or Europe, making Singapore an ideal base for that."
That was when Civmec placed its first tranche of shares at 11.8 Singapore cents "based on our earnings at that particular time. Besides, the risks they (pre-IPO investors) took was quite enormous," he said.
"Six months later, when the project contracts started coming in, we placed our second tranche at 23.4 cents, as we had a bit more meat on the plate by that stage."
The latest IPO pricing of 40 cents was based on Civmec's Q1 2012 revenue of $43.7 million and net profit of $5.2 million, and also on book-building, he explained.
Civmec's entry here bears an uncanny similarity to that of competitor Ausgroup, whose Singapore IPO exactly seven years ago of 50 million placement shares with a public portion also of 2 million shares - was also well received. Coincidentally, Ausgroup's share price has been rising recently to match Civmec's at 40 cents.
Mr Fitzgerald said Ausgroup is more into SMP and engineering work, while Civmec is currently more involved in civil projects, like "building concrete caissons, or the footing, for Chevron's offshore platforms, with this nevertheless requiring high skill sets".
Apart from growing its civil engineering business, Civmec has also set its sights on building up its technological capabilities to handle SMP projects in two to three years time, he added.
Its Henderson facility near Perth currently houses 700 workers, from engineers to tradesmen like boiler-makers, and "we could go up to 800 to 1,000 from here".
He noted that the growth outlook in the next four to five years remains strong for Australia's oil & gas and mining industries with an estimated A$406 billion (S$526 billion) of projects and over half of this in Western Australia where all of Civmec's projects are currently.