Kim Heng’s riding on high oil prices and reaping the benefits

I met up with Thomas Tan, CEO of Kim Heng, for coffee. The offshore & marine company his family founded has bucked the trend, with its share price surging 40% over the past week as it is seen as a beneficiary of the climbing oil price. I first met Thomas back in 2008 when he…

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Terence Wong, CFA

CEO and Executive Director
Azure Capital

Mar 9, 2022

I met up with Thomas Tan, CEO of Kim Heng, for coffee. The offshore & marine company his family founded has bucked the trend, with its share price surging 40% over the past week as it is seen as a beneficiary of the climbing oil price.

I first met Thomas back in 2008 when he tried to list his company. Market conditions turned sour and the IPO was shelved. It was only listed in 2014, when the oil price hit a fresh peak. But shortly after listing, oil price went on an unprecedented slump. Thomas only used the IPO proceeds in 2017, snapping up vessels from troubled rivals like SGX-listed Swiber, POSH and Ezra for as low as 10% of the value. These cheap buys are paying off with the strong upswing in demand.

However, Kim Heng is betting its future on offshore windfarm, with the bulk of the contracts coming from Taiwan and Vietnam. The renewable business accounts for 30% of total revenue, and is expected to hit 50% within the next three years. This is not surprising given that the market is expected to grow 24% a year from 2019 to 2029.

While it hasn’t been smooth sailing for Kim Heng over the past decade, the fair wind should hopefully change that.