$Oceanus^(579.SI)

Massive congratulations to Oceanus and fellow long investors!

After a 6 month wait, and with the confidence of the positive H1 2021 audited results, Oceanus makes history as the first turnaround company in Singapore to exit the SGX watchlist as of 29 September 2021. For context, Oceanus had been placed on the SGX watchlist since 14 December 2015.

The approval by SGX out of the watchlist signals the regulator&rsquo s confidence in Oceanus to sustain its positive growth trajectory. This also marks yet another promise delivered by Oceanus&rsquo s management to its shareholders.

With the exit, here are some of the benefits we can look forward to:

1. Tech-up Expansion Plans

The successful exit from SGX Watchlist is a fitting end to the clean up phase and build up phase.

More importantly, it pivots Oceanus to devote its full attention onto the main thrust of its expansion plans: tech-up

As a recap, Oceanus achieved a successful turnaround restructuring into its four revenue pillars: Food Production, Distribution, Services and Innovation.

The strategy is simple: Integrate and leverage on technology to digitalise the aforementioned four pillars as a market leader in food supply chain management, distribution and food security.

Over the months, we have heard various business updates from Oceanus. It is useful for us as investors to be mindful where these updates feature in the framework of the 4 pillars.

CEO Peter Koh summarised the significant developments in yesterday&rsquo s announcement:

A) Food Production:
- Multiple partnerships and investments. First Oceanus FoodTech Hub (soon to launch) and other key aquaculture production facilities in the region.

B) Distribution:
- Establishment of digital exchange platform (expounded in April 2021 AGM), allowing businesses to improve product delivery and quality, with access 2,000+ FMCG products in Oceanus&rsquo s network.
- Approved distributor of China Resources Wufeng Co. Ltd, a massive Chinese state-owned conglomerate. Significant news! (see post:  https://www.investingnote.com/posts/2310320...)
- Launch of Singapore Farmer (SG Farmer) featuring Oceanus brand-name products alongside other FMCG offerings in China and Singapore.

C) Services:
- AP Media and subsidiaries continued excellence and awards in industry. Noteworthy events include the successful live streaming of Singapore National Day parade 2019.

D) Innovation
- First Extended Reality AGM for Oceanus in April 2021, amongst the first of its kind globally.

For those who insist that Oceanus management does nothing but tell &ldquo stories&rdquo and blow hot air, please re-read the above.

2. Removal of intraday trading restrictions

I have a love-hate relationship with intraday trading. On one hand, they provide the &ldquo nitro boost&rdquo to rocket the share price with the intraday buy orders. On the other, the share price moves too fast at times to form reliable support levels to cushion a manipulative price dump.

Nonetheless, the previous rally that started in Q4 2020 was largely fuelled by these intraday buys.

Ever since the sell-off earlier in February, numerous brokerage firms have restricted investors placing a long-intraday buy in Oceanus. Supposedly, to &ldquo protect investors&rdquo . Oceanus being on the SGX watchlist, justified their action.

However, there are no restrictions in intraday short / sell positions for Oceanus.

Now that Oceanus is out of the watchlist, there will be absolutely no justification for this unfair practice.

I would encourage you to contact your broker if you still face similar intraday buy restrictions.

3. Greater access to funding

There were some that have expressed concern over the relatively high &ldquo loans and borrowings&rdquo as at June 2021. I am not too worried as Oceanus has sufficient cash and receivables to repay these amounts, as another investor rightly pointed out.

However, this accentuates a broader point that I touched on previously: Oceanus needs cash to expand. During the April AGM, Oceanus has alluded that it may consider loans, issue convertible bonds, right issues and placements to do so.

With the successful exit from SGX watchlist and its growth story on track, Oceanus is better positioned (read: lower default risk) to secure funding and the cash it needs to expand.

Yes, I know what you&rsquo re thinking. Fret not, cash can be raised via equity or debt. This does not necessarily mean shareholders will get diluted. Even so, dilution is not necessarily a bad thing, so long as Oceanus keeps growing. 2% of $1000 is better than 10% of $100.

More of this another day.

4. Ability to attract institutional investors

At the risk of sounding like a broken record, institutional investors that were previously unable to invest in watch-listed Oceanus because of regulatory restrictions (depending on their internal policies and clients&rsquo risk profiles).

With the exit from watchlist, these regulatory restrictions will be lifted.   We can expect an increase in institutional ownership in Oceanus. These are your mutual funds, hedge funds, family offices, and treasury departments. The big money.

Look at what happened to the price action today. S$19million worth of Oceanus shares traded hands. Anyone venture a guess how much of that was the first of institutional money?

I will leave it to your imagination what happens with an increase in demand.

5. Ease of business partnerships and deal-making

Recall that the gameplay for 2021 of the Tech-up phase (pg 43 of Annual Report) is, to &ldquo Establish Network &ndash Develop IPs and build network of key partners&rdquo .

Some have argued that Oceanus&rsquo s tech-up plan is impractically ambitious, and the goal to build the entire distribution ecosystem on blockchain is but a pipe dream.

But Oceanus never said they had to do it alone. Neither did they say it will happen immediately.

Rather, I foresee the plans to include strong partnerships and joint ventures. In concluding yesterday&rsquo s news release, CEO Peter Koh said, &ldquo Furthermore, the (Oceanus) Group will be looking into building a team of talented individuals, cultivating strategic partners, and identifying synergistic technology businesses suitable for acquisition or investment.&rdquo

Being out of the watchlist as a healthy turnaround growth company positions Oceanus fairly at the negotiation table.

6. Increase coverage by media and analysts

Before today, if you had tried researching Oceanus as an investment opportunity you would barely find a thorough or detailed analysis from a big brokerage house.
Sure, there are the exceptional (no pun intended) review from small retail investors like myself every now and then.

Pursuant to the watchlist exit, more analysts will naturally cover and consider Oceanus as an investment opportunity.   In addition, Oceanus has a rather captivating turnaround story to boot.

I don&rsquo t know about you, but I do feel that Oceanus has an added advantage of having established itself as a local brand name. It has a rich history, a story that fully warrants even a documentary of its own. With all the twist and turns across the decade, It is finally maturing into the stable and profitable company.

Nonetheless, expect media coverage and more attention given to Oceanus in the coming months.

Summary

Once again, congratulations to the long investors who kept the faith and believed! Our patience and trust in Oceanus&rsquo s management is rewarded.

From what we know of Oceanus&rsquo s management, they did not successfully exited SGX watchlist only to rest on their laurels. Instead, this surely marks the dawn of an exciting new chapter.

I am not gonna lie. The wait was arduous. Especially amidst the growing amount of fud and fear-mongering as the process tarried. But one thing I&rsquo ve learnt the past 6 months waiting for today is this: It&rsquo s easy to be a contrarian, but it&rsquo s not easy to be right.

But I suppose that is the wonder and allure of investing in Oceanus. The prodigal son of our local SGX market that has finally returned.