Gallant Venture in misadventure with Temasek Holdings

The recent Hyflux saga must have brought much publicity for Indonesia conglomerate Salim Group, which had emerged as a surprising white knight for the embattled Hyflux. However, Salim Group already made waves in Singapore back in 2006 when it joined forces with SembCorp Industries to list Gallant Venture in Sesdaq (the predecessor of Catalist). The major restructuring brought 16 different companies together under the umbrella of Gallant Venture and saw Sembcorp Industries rationalising its industrial park and leisure investments on the Indonesian Riau Islands through Gallant Venture.

Today, Gallant Venture is an investment holding company with five major business segments – Automotive, Utilities, Resort Operations, Property Development and Industrial Parks. With such diversified business activities, understanding Gallant Venture is certainly not easy. As a matter of fact, Gallant Venture is no longer just an infrastructure developer-cum-operator located in Bintan because it now derives most of its revenue from its automotive business.

With a market capitalization of $693 million, Gallant Venture is a mid-size cap in Singapore Exchange. Salim Group, through Parallax Venture Partners XXX Ltd, is a major shareholder with 55.02% stake while Temasek Holdings, through SembCorp Industries, holds 10.4%. With two big boys behind Gallant Venture, what is the prospect for Gallant Venture, which has seen its share price plunging to heart-stopping levels in recent years? Read on to find out the intriguing story of Gallant Venture.

Gallant Venture braving the storms

Through the years, Temasek Holdings had pared down its stake in Gallant Venture, starting from 650 million shares in 2006 to the current 555 million shares. And for good reasons too. Gallant Venture share price started off brightly upon IPO in 2006, surging from $0.47 to $1.50 within six months. The good share price performance was supported by good business performance (net profit was $30 million in FY2006). Those good old days must be so surreal for investors but unfolding events occurred and that led to Gallant Venture share price collapsing to abysmal levels till now.

Things began to unravel in 2007 when Gallant Venture reported lower net profit of $15.8 million for FY2007. Subsequently, the Great Financial Crisis came along which saw Gallant Venture recording losses of $12.7 million in FY2009. Those events combined to knock the wind out of Gallant Venture, causing it’ share price to plunge to a low of $0.08 in November 2008. However, Gallant managed to bounce back by posting decent profits from FY2010 to FY2014. In 2013, the net profit was a record high of $70 million but apparently, investors did not bite the bait because the share price remained stagnant at the $0.30 level.

And then there was the bombshell loss of $172 million in FY2015. Gallant Venture had attributed this to the challenging Indonesia economy impacting its automotive business. That really spooked the hell out of investors who ran for their lives, sending Gallant Venture to a low of $0.12. Since then, this counter has never seen daylight. Despite the erratic business performances, my opinion is that Gallant Venture is [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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