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https://sg.finance.yahoo.com/news/starburst-holdings-ipo-key-takeaways-management-005132438.html
Asean Equities Review was invited to a Management Presentation from Starburst Holdings Limited. Starburst has launched their IPO on SGX Catalist Board at 31 cents a share with a 2 million share public tranche. The IPO offer opens on 3 Jul and closes on 8 Jul. We were able to interact with Management to understand more about their fairly unique business.
Starburst are an engineering specialist that serve the defence and homeland security markets. In particular, they are able to design and fabricate firearm shooting ranges and tactical training mock-ups. An example of a tactical training mock-ups is an airplane mock-up for simulating and training to handle terrorist hijacks. Starburst started off as a specialist sub-contractor for a sub-contractor but are now taking on projects directly as a specialist for the main contractor. Their track record includes over 20 facilities completed in both Southeast Asia and the Middle East. Here are our key takeways on their business.
Their type of customers are certainly interesting. The defence and homeland security end users often have good budgets and are more willing to spend on the areas that they consider necessary. After the recent Arab Spring in the Middle East, governments there have been increasing the budget spent on internal security. In a way, these are recession proof industries as these are key expenditures of governments in good and bad times.
Starburst 3
Looking at Starburst’s net margins, these have increased from 26% in FY2011 to 38% in FY2012 and then 41% in FY2013. This is driven by Starburst offering an integrated solution for the firearms training and tactical training facilities. They are able to design, fabricate, install and maintain these facilities. This is one of the reasons behind the increase in net margin.
Given the project based nature of work, Starburst revenues tend to be lumpy. Sales gestation periods for projects also tend to be longer. To mitigate this, Starburst has in recent years started to offer maintenance services for the facilities that they build. This gives them a recurring revenue base with one contract stretching up to 20 years. It also enables them to keep in touch with their customers.
Part of Starburst’s Intellectual Property includes their “Searls” anti-ricochet panels. This was developed in-house and is currently manufactured by an OEM. These panels are able to absorb 40 to 100 rounds per 100 sq mm. Starburst also uses ballistic absorbing concrete developed by researchers in the US Army. These materials are used extensively in the facilities that Starburst installs. In total, Starburst estimates that they have installed a total of 100,000 sqm of such panels.
Starburst has close business relations with key global players in the military training software and equipment market. These partners have complementary offerings to Starburst and are often a source of referral for new projects.
Starburst 2
Finally if you take the perspective of the end customers, Starburst’s business is one with high barriers to entry. This is because any company that wants to bid for such projects must have a track record for building such facilities. Their products and materials must be accredited and certified for use in the various markets. They must also demonstrate actual design and fabrication knowledge of such systems as it is really a matter of life and death. Hence Starburst has a strong competitive advantage in its business. This has resulted in high barriers to entry and increasing profit margins.
GET TO THE POINT : Starburst orderbook for projects in hand is $19.7 million and this is expected to be realised this year. It also has a $26.1 million orderbook for maintenance work but this stretches for the next 19 years. Thus the current and future business prospects for Starburst certainly look very good.
(Pictures from Starburst Holdings Limited)
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https://sg.finance.yahoo.com/news/starburst-holdings-ipo-key-takeaways-management-005132438.html
Asean Equities Review was invited to a Management Presentation from Starburst Holdings Limited. Starburst has launched their IPO on SGX Catalist Board at 31 cents a share with a 2 million share public tranche. The IPO offer opens on 3 Jul and closes on 8 Jul. We were able to interact with Management to understand more about their fairly unique business.
Starburst are an engineering specialist that serve the defence and homeland security markets. In particular, they are able to design and fabricate firearm shooting ranges and tactical training mock-ups. An example of a tactical training mock-ups is an airplane mock-up for simulating and training to handle terrorist hijacks. Starburst started off as a specialist sub-contractor for a sub-contractor but are now taking on projects directly as a specialist for the main contractor. Their track record includes over 20 facilities completed in both Southeast Asia and the Middle East. Here are our key takeways on their business.
Their type of customers are certainly interesting. The defence and homeland security end users often have good budgets and are more willing to spend on the areas that they consider necessary. After the recent Arab Spring in the Middle East, governments there have been increasing the budget spent on internal security. In a way, these are recession proof industries as these are key expenditures of governments in good and bad times.
Starburst 3
Looking at Starburst’s net margins, these have increased from 26% in FY2011 to 38% in FY2012 and then 41% in FY2013. This is driven by Starburst offering an integrated solution for the firearms training and tactical training facilities. They are able to design, fabricate, install and maintain these facilities. This is one of the reasons behind the increase in net margin.
Given the project based nature of work, Starburst revenues tend to be lumpy. Sales gestation periods for projects also tend to be longer. To mitigate this, Starburst has in recent years started to offer maintenance services for the facilities that they build. This gives them a recurring revenue base with one contract stretching up to 20 years. It also enables them to keep in touch with their customers.
Part of Starburst’s Intellectual Property includes their “Searls” anti-ricochet panels. This was developed in-house and is currently manufactured by an OEM. These panels are able to absorb 40 to 100 rounds per 100 sq mm. Starburst also uses ballistic absorbing concrete developed by researchers in the US Army. These materials are used extensively in the facilities that Starburst installs. In total, Starburst estimates that they have installed a total of 100,000 sqm of such panels.
Starburst has close business relations with key global players in the military training software and equipment market. These partners have complementary offerings to Starburst and are often a source of referral for new projects.
Starburst 2
Finally if you take the perspective of the end customers, Starburst’s business is one with high barriers to entry. This is because any company that wants to bid for such projects must have a track record for building such facilities. Their products and materials must be accredited and certified for use in the various markets. They must also demonstrate actual design and fabrication knowledge of such systems as it is really a matter of life and death. Hence Starburst has a strong competitive advantage in its business. This has resulted in high barriers to entry and increasing profit margins.
GET TO THE POINT : Starburst orderbook for projects in hand is $19.7 million and this is expected to be realised this year. It also has a $26.1 million orderbook for maintenance work but this stretches for the next 19 years. Thus the current and future business prospects for Starburst certainly look very good.
(Pictures from Starburst Holdings Limited)
Related Articles:
How Ambitious are Vallianz’s Fleet Expansion Plans
TTJ Earnings jump as more New Contracts are Secured
Like us on Facebook for Daily Updates
