Oceanus - Change of Senior Mgmt = Opportunity!?

Oceanus (http://www.oceanus.com.sg) - Holding company for Aquaculture production, processing and distribution. Focus is on Abalone... Yummy!

Why is it a good time to capitalise on Oceanus? Let's start off with the reason why it's Overly Sold now.

Oceanus stock price has been battered for quite a long time (3 Years!) since 28/9/2009... ok maybe 2 years +.
i) One part is due to the financial crisis that brought down its peak price of $0.45 to around $0.30 ending year 2010.
ii) The other more crucial part is .... *Drumroll Please* the DEATH of its Prized Jewels - Abalones.

Reason? *Extracted from the RESPONSE TO QUERIES FROM SGX-ST*

Q: The Company’s reply on the reasons for the high mortality rate – Why was quality feed unavailable?

A: According to Mr Yu De Hua, the out-going CEO of the Company, the Company has been primarily feeding the abalones with high quality seaweed which is very expensive during the period from May to November. In 2011, the number of abalones has increased, resulting in the exponential increment in its abalone feed cost.
Accordingly, to reduce such cost and to increase profit for the Company, the production team decided to significantly reduce the usage of high quality but expensive seaweed and opt for cheaper but lower quality seaweed to feed the abalones.
With the lower nutrient in the cheaper quality seaweed and the high water temperature during the summer season, immunity of the abalones was reduced significantly, thus resulting in high mortality rate of the abalones.

NOW the Good News.
  1. Oceanus has undergone a Re-composition of the Board of Directors and Change of Senior Management of PRC subsidiary.
  2. The current New CEO, Dr Ng, is confident that the company will return to the Black by 2013. And according to the announcement (http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_68DF2225BFE68787482579510058CF1E/$file/OGL_Annc_Response_to_SGX_queries.pdf?openelement)
    He will adopt massive actions to build up the population of good quality abalones for longer term harvest while the sales of abalone laggards and juveniles as well as sea cucumbers will provide short term cash flows.
  3. The News have seem to entice loads of speculators who are hopping on to the wagon and ride this momentum up. This can be seen below:

So there you go. A High Probability Trade where the Trend is just starting. Hit-n-Run begins at $0.087 and ends at $0.10. You can probably even hold it all the way till 2013 if you believe the management will do a good job!

The following is just for informative purposes, not a Recommendation. Please kindly read the Disclaimer here.

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