Starburst Holdings

[thor666]

An observation - I had a quick glance at the result and noticed that the business is not scalable (able to generate higher percentage profit margins with bigger revenues). That said, result is good on the back of expansion. Starburst will continue to thrive based on political and economic instability in the regions they are in.

Not vested, still monitoring.

[LocalOptimal]

http://infopub.sgx.com/FileOpen/Starburs...eID=333665

- 11.8 million contract awarded.
- Tangible effect on FY ending Dec 15.
- Interesting because for previous FYs, revenue of Starburst seems around 20 million. Considered a relative big contract?

[bear]

That's an interesting piece of announcement.To be honest I never thought that Starburst will be involved in a non-defence related project like Marina One.

What exactly will the facade steelworks be like for this Marine One project?How profitable is it and what's the likelihood for recurring maintenance contract to maintain the steelworks over the years?Can anyone with expertise in the construction businesses do some explanations? From a simple search on the Internet I can only find this website that provide some explanations on Facades....

http://www.steelconstruction.info/Facade...interfaces

Another question I wonder is whether this Marina One project will generate a high Net Profit Margin(%) like its other defence related project.

A point to note is from a review of the DBS Vickers research report last September is that in year 2012,
"Starburst Singapore was accredited with the Certificate of Structural Steel Fabricator for Category S3 from the
Singapore Structural Steel Society.
Completed first project relating to the design, supply, fabrication and installation of the ballistic fit-out for a
multi-storey indoor shooting range facility in Southeast Asia."

A search on the Singapore Structural Steel Society website shows that quite a significant number of companies are on the Steel Fabricators Accreditation List.So the bidding process that Starburst has just won might be competitive,and that the barrier of entry to such projects might not be that high as I initially thought.

Another point to point is that as of 3Q2014 nine months ended revenue of Starburst has already exceeded 29million,so its highly likely that for FY2014 and also FY2015 the revenue will exceed 30million and even 40million respectively,much more than the 20million in FY2013.Correct me if I am wrong...

To answer your question whether this is considered a relative big contract,again from the DBS Vickers research report in FY2014,selected major projects of a Middle East Shooting range and a Southeast Asia Law enforecement and civil defense-related training centres are worth 21.2 and 26.5millions. So this Marina One project is a considerable contract but probably not their most significant.

The key question we want to ask is that can this company continue to bring in big orders from Middle East region which it is targeting and consequently manage all the projects smoothly and at the same time maintaining costs given the record order book achieved year on year?

[thor666]

Bear - my sentiments too. I see this more an opportunistic move by management to grab revenue over profits. I would love to love this company (was quite serious on bidding for ipo) but so far I do not see the announcements aligning to my personal preference of slow and steady growth.

(Not vested)


Sent from my iPad using Tapatalk

[bear]

The FY2014 results for Starburst Holdings will be released this week on 12th Feb,after trading hours.

"Starburst Holdings Limited will be releasing its unaudited full year financial results for the financial
year ended 31 December 2014 on 12 February 2015, after trading hours. "

Today there is another piece of news regarding a small contract win worth around S$2.5 million in the Middle East region.

http://infopub.sgx.com/FileOpen/Middle%2...eID=334198

"The Board of Directors of Starburst Holdings Limited (the "Company", and together with its
subsidiaries, the “Group”) is pleased to announce that Starburst Engineering Pte Ltd, a wholly
owned subsidiary of the Company has been awarded contracts totalling approximately S$2.5
million for a project located in the Middle East. Under the contracts, Starburst Engineering Pte Ltd
will undertake ballistic protection works to a firearm training facility in the Middle East. Contract
performance is scheduled to commence in February 2015 and be completed in September 2015."

I guess this small contract win is unlikely to attract interests of potential investors yet.

Let's continue to keep our scrutiny on the upcoming results as well as its Middle East business...

[LocalOptimal]

Hi bear:

http://www.starburst.net.sg/structural-a...teel-works

Seems like they do work on non-defence structural works from time to time. It is not a new thing to Starburst.

From your posts, I assume you are vested. While I am vested, I will continue to keep scrutiny over the next few reports. At current price, it has returned close to 100% for many investors. A less than optimistic report will make the decision easy for them to cash out the profit.

[LocalOptimal]

Heavy selling one day before results.

Insider news?

[Tiggerbee]

Heavy selling one day before results.

Insider news?

Share price also broke previous low of 57c.. Traders probably cut loss.

[LocalOptimal]

Results out.

If I do simple math and extract the 4th quarter results,

Revenue is around 10m, this is in line with my expectations.

Profit is arnd 2.5m. It is lower than 3Q after accounting for the IPO expense in 3Q. This is where I expect a higher GPM.

1.2 cents dividend declared.

Seems like as a FY, results look good, but most of it came from Q1, afterwhich the profit remained around 2m.

EDIT: Just realised it's a more than 50% decline YoY for Q4.

[bear]

Hi bear:

http://www.starburst.net.sg/structural-a...teel-works

Seems like they do work on non-defence structural works from time to time. It is not a new thing to Starburst.

From your posts, I assume you are vested. While I am vested, I will continue to keep scrutiny over the next few reports. At current price, it has returned close to 100% for many investors. A less than optimistic report will make the decision easy for them to cash out the profit.

Hi LocalOptimal:

Yes I am vested small lots.

Let us take a look at the results of Starburst over the last few years.
(Please correct me if I have make any mistakes in my data)

Net Profit(S$M) and Net Profit Margin(%) over the years
6.0...................26.4.................FY2011
6.5...................37.3.................FY2012
8.7...................41.5.................FY2013
13.16...............33.4.................FY2014

As you can see although the Net Profit increases by around 51% to around S$13.2 million,the Net Profit Margin decreases by 8.1% as compared to FY2013,due to the IPO expenses(one off S$1.2 million) incurred last year,as well as the employee benefits for their new Abu Dhabi sales office.

Suppose we remove the S$1.2 million one-off IPO expenses,the net profit stands at 36.5%(healthy in my opinion),which is still lower than that of FY2013,so I supposed the higher expenses for their Middle East operations do have a higher cost resulting in subsequent lower profit margin(I have a feeling their new Middle Eastern sales directors have a lucrative compensation package as compared to their South East Asia operations,albeit a higher revenue potential.

As promised by the management to distribute at least 20% of FY2014 profit,Starburst also announced a dividend of S$0.012/share,a dividend yield of 2.0%,clearly not attractive from the viewpoint of some investors. Starburst is positioned as a growth stock,and failure to do so will 'burst' the expectations of the shareholders(note that the stock has rose almost 100% since IPO)

It is likely that the net profit margin next year remains comparable at around 30-35% as there is no major change in company's operating structure from last year,hence it is crucial that the company wins big contract this year in order to safety secure over S$40millions of revenue to meet the expectations of current and potential investors.

A positive point to note is that the management is aiming to increase the proportion of revenue due to maintenance contracts to achieve more stable recurring cash-flows over the next few years.

I have to emphasized that being vested in this stock carries with it some risks due to its growth expectations,however promising the defence infrastructure business may seem in this period of instability in the Middle Eastern region,we have not seen a major contract win S$20millions and above yet(IIRC a DBS report in Q3/Q4 last year states that there is a potential win of S$25 million,S$30million and S$20million respectively in Middle East and Southeast Asia) in late 2014 and in 2015.

(Vested but refraining from adding more lots until clearer signs of clear potential revenue growth this FY2015)