Oceanus Group Limited just released a very disappointing set of half year 2024 results on 14th August 2024 which revealed a loss of <S$1.17Mil >. This is a hefty 92% worsening of results relative to 1H2023 of <S$610K>. Having years of losses and a mere 5% growth in revenue is one of the red flag indicator that something maybe wrong with its management team. The list of queries from SGX on 22nd August 2024 further add to the uneasiness over its financial health.
Personally, I am a bit spooked by another weird transaction by Oceanus management team. From the SGX query 3, it appears that the management of Oceanus Group has given a S$1.268Mil loan to a 3rd party that is interest free which is honestly absurd. If this 3rd party is so weak financially, why did Oceanus choose to work with it? I am sure there are other vendors out there who can fulfil what they are doing.
In addition, it is ridiculous to give an interest free loan to a 3rd party and to take up credit risk of default by the external non-related party. This does not make commercial sense at all. Also why not do equity buy-over instead if the platform technology is so unique that the survival of Oceanus Group depends on it? I am not sure whether it is just me here but do anyone else smell a rat somewhere....
Parting thoughts
I am currently vested in Oceanus Group via a small stake of around S$1K as previously I like the growth story sold by its CEO. But seems that there are some "more than meets the eye" stuff going on here. Oceanus Group audit committee should come out to clarify on why their management team entered into something that makes terrible commercial sense.
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