Is Starburst Holdings Ltd (SGX:40D) a Potential Growth Story?

 

 

 

 

 

 

For most of the Singaporean males out there, this company’s business might be familiar to some of you or might have bring back some memories in the early days of National Service. Yes, Starburst Holdings Ltd (SGX:40D) is one of the Singapore Armed Forces (SAF) local contractors specializing in the design and engineering of firearms-training facilities.

 

Since their IPO in Jul 2014, their price has gained 40% in a short course of just 4 months!

 

Company Background

Before its IPO, the Starburst Holdings Ltd has already a track record of up to 15 years in providing firearms-training facilities and tactical training mock-ups.

 

The Group has three main business segments, namely:

 

1. Firearm Shooting Ranges (69.6% of total revenue) – the Group designs, fabricates and installs anti-ricochet ballistic protection systems for live firing-ranges and close quarters battle facilities

 

2. Tactical Training Mock-ups (16.4% of total revenue) – Design, fabricate and install training facilities which simulates conventional soldier operations such as rescue and evacuation, counter-terrorism and sniper operations

 

3. Maintenance Services and Others (14% of total revenue) – Maintain facilities in optimal conditions; design, supply and/or

fabricate structural and architectural steel works.

 

 

One of the fire-range facilities done by the Group

With revenue of S$21 million as at FY2013, the Group made S$8.7 million in net profit over the same period, with net profit margins increased from 26.4% in FY2011 to 41.5% in FY2013. Currently, Starburst has secured contracts of approximately S$45.8 million, half of which is attributed to the Firearm Shooting Ranges and Tactical Training Mock-ups business segments which would last them for the next one year. Maintenance Services accounted for the remaining S$26.1 million order book which would given them visibility for up to 20 years.

 

With a gross proceeds of S$15.5 million raised, the Group intends to increase their fabrication capacity through future acquisitions and to grow their brand not just in the local markets but in Southeast Asia and the Middle East.

 

Value in Action

The growth story for Starburst Holdings Ltd seems attractive but with limited disclosure of its financial statements, more digging would probably have to be done to understand the managers’ style of running the business.

 

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All views and opinions articulated in the article were expressed in Willie’s personal capacity and do not in any way represent those of his employer and other related entities. Willie does not own any shares in the companies mentioned above

 

 

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