[SINGAPORE] Digiland International, a loss-making computer distributor, wants to accelerate its transformation into an oil and gas company with the appointment of a new chief executive officer last week.
The mainboard-listed company, which is changing its name to New Silkroutes Group Ltd on Tuesday, is aiming to boost its market value to as much as US$150 million within a year to draw fund managers investing in small-cap stocks, CEO Goh Jin Hian said. That's double Digiland's worth at Friday's close.
Shareholders will be looking to Dr Goh, the son of Emeritus Senior Minister Goh Chok Tong, Singapore's former prime minister, to turn Digiland's fortunes around after losses in eight out of the past 10 years. The new CEO also plans to broaden its business as an energy trader to an investor and consultant on oil and gas storage projects for governments, as well as power generation.
"At the end of the day, what do governments grapple with: they need energy and the infrastructure, and to generate power," Dr Goh, 46, who left a career as a doctor and senior manager of Parkway Holdings, Singapore's biggest owner of private hospitals, in 2011 to enter the oil and gas industry, said in an interview in Singapore.
The stock closed at 0.2 Singapore cents on Friday, far below the 20 Singapore cents minimum trading price required for shares on the the mainboard starting next year. Dr Goh said he plans to consolidate the shares to meet the requirement.
The computer distribution business may also be sold amid the transformation, Dr Goh said, because "the retail tech business is not a space we are keen on." Malta Partnership Digiland expanded into the energy sector at the end of 2013, when it began trading marine gasoil. It forged a partnership with the Maltese government in May to turn Malta into a trading center for energy products.
The bigger step into the energy sector comes as oil prices drop. Oil capped its steepest weekly loss since March as the International Energy Agency forecast prices will need to fall further to curb excess supplies.
Dr Goh said he's not concerned about declining prices because he's not in the oil supply business. Future expansion into energy will tap on Singapore's free-trade agreements with countries in Asia and Europe.
Investments in energy storage and power generation are longer-term businesses that may not yield significant profit contributions initially, he said."They are strategic and important because they enable us to lock in the supply and sale contracts for oil and gas," Dr Goh said. "This is how, for a small company that is starting up, we believe we can compete with the big boys." The company acquired Dr Goh's 80 per cent stake in an oil and gas business in December for as much as US$7.6 million in bonds, which could be converted to as much as 15 per cent of Digiland based on performance targets.