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BHU

$0.895 SGD 79.5M market cap 2026-02-22
SUTL Enterprise Limited BHU BUFFETT / MUNGER / KLARMAN SUMMARY
1 SNAPSHOT
Price$0.895
Market CapSGD 79.5M
EVSGD 17.3M
Net DebtSGD -62.2M
Shares88.8M
2 BUSINESS

SUTL Enterprise is Singapore's only listed marina operator, running the award-winning ONEĀ°15 Marina Sentosa Cove (272 berths, ~3,800 members) plus a 50+ yacht charter fleet. Revenue comes from berthing fees, hospitality (hotel, F&B), membership entrance fees recognized over tenure, yacht chartering, and management contracts for marinas in Thailand and Indonesia. The company earns substantial interest income from investing its S$66M liquid asset base in Singapore T-bill-linked instruments.

Revenue: SGD 39.6M Organic Growth: -1.2%
3 MOAT NARROW

Local monopoly as Singapore's only private marina with CIQ facilities for superyachts. High switching costs from S$60K non-refundable entrance fees locking in 3,800 members. Award-winning brand (8x Asian Marina of the Year, 2x International Marina of the Year). Near-100% berth occupancy. Limited by ~8-year remaining Sentosa land lease (expiry ~2034).

4 MANAGEMENT
CEO: Arthur Tay Teng Guan (since 2010)

Conservative capital allocator with large cash hoard (S$66M liquid assets on S$80M market cap). Pays consistent 5c/share dividend (~50% payout). Failed Malaysian JV (Puteri Harbour) destroyed ~S$40M over a decade. New management contracts in Phuket and Indonesia are capital-light. Share buybacks minimal. Excess cash invested in T-bill-linked notes earning S$2M/year interest income.

5 ECONOMICS
20.9% Op Margin
18.5% ROIC
SGD 5.3M FCF
-3.8x Debt/EBITDA
6 VALUATION
FCF/ShareSGD 0.060
FCF Yield6.7%
DCF RangeSGD 1.23 - 1.65

Base case: 3% FCF growth for 8 years (constrained by lease), 10% discount rate, ZERO terminal value (lease expires and is not renewed). Upside case adds 60% probability of lease renewal with terminal value at 8x FCF. Both cases add S$62M net liquid assets at face value. Probability-weighted fair value: S$1.48/share (65% upside from current price).

7 MUNGER INVERSION -33.8%
Kill Event Severity P() E[Loss]
Sentosa lease non-renewal in 2034 -70% 20% -14.0%
Lease renewed on unfavorable terms (2-3x rent increase) -30% 30% -9.0%
Controlling family self-dealing / value extraction -25% 15% -3.8%
Marina demand structural decline in Singapore -50% 5% -2.5%
Interest rate decline reducing S$2M investment income -10% 25% -2.5%
Stock liquidity trap (unable to exit position) -5% 40% -2.0%

Tail Risk: Worst case scenario combines lease non-renewal with depletion of cash reserves through failed overseas ventures. In this scenario, the company would wind down operations in 2034 with only net current assets remaining (~S$50M or S$0.56/share). However, this tail risk is partially mitigated by the massive liquid asset buffer (83% of current market cap).

8 KLARMAN LENS
Downside Case

Lease expires in 2034 without renewal. The S$52.6M PP&E (leasehold land and building) goes to zero. Company winds down Sentosa operations. Net liquid assets of S$62M are returned to shareholders (~S$0.70/share). Remaining deferred membership income recognized as final revenue. Total return scenario: roughly -20% from current price over 8 years, equivalent to -2.8% annualized. Not catastrophic.

Why Market Wrong

The market is treating the land lease expiry as a binary event and pricing in a high probability of non-renewal. At S$0.895, the stock trades at just 1.0x EV/EBITDA -- implying the market assigns near-zero value to the operating business beyond the liquid assets. The S$35.2M of deferred membership income (guaranteed future revenue) is ignored entirely. In reality, the marina is a flagship Sentosa asset generating steady tax revenue, employment, and tourism draw. Renewal is the most likely outcome.

Why Market Right

Singapore micro-caps with controlling families, no analyst coverage, and illiquid stock deserve a discount. The 8-year remaining lease is a real countdown clock. Management has demonstrated questionable capital allocation (Malaysian JV failure). The Brooklyn Marina bankruptcy shows the brand doesn't guarantee success. Without the Sentosa location, SUTL Enterprise is just a small management company with excess cash.

Catalysts

1. Lease renewal announcement (removes single biggest risk) 2. Special dividend or capital return from S$66M cash hoard 3. Successful scaling of Phuket/Indonesia management contracts 4. Singapore Yachting Festival becoming a material revenue contributor 5. Privatization bid by Tay family at premium to market price

9 VERDICT WAIT
B+ T2 Resilient
Strong Buy$0.6
Buy$0.75
Sell$1.5

SUTL Enterprise is a rare find: a profitable, cash-rich, near-monopoly marina business trading at 1.0x EV/EBITDA with a 5.6% dividend yield. The fundamental value is S$1.23-1.65 per share, offering 40-85% upside. However, the stock's extreme illiquidity, the 8-year lease countdown, and the lack of near-term catalysts justify patience. Accumulate below S$0.75 where liquid assets alone cover the purchase price. At current S$0.895, the risk/reward is favorable but not exceptional.

🧠 ULTRATHINK Deep Philosophical Analysis

BHU (SUTL Enterprise) - Ultrathink Analysis

The Real Question

The real question is not whether ONEĀ°15 Marina is a good business -- it clearly is. Near-monopoly, 100% occupancy, 41% EBITDA margins, S$35 million of pre-collected membership revenue sitting as a quasi-permanent float. The real question is: what is the correct price to pay for a high-quality asset with an 8-year countdown clock?

This is ultimately a question about probability weighting. If you believe the lease will be renewed (say, 70% probability), the stock is worth S$1.50+ and you're buying at a 40% discount. If you believe it won't be renewed (30%), you're still buying at only a modest premium to liquidation value. The expected value math works either way -- but the emotional math is harder. Can you hold a position for 8 years knowing the key risk is binary and entirely outside your control?

Buffett would say: "Risk comes from not knowing what you're doing." In this case, we know exactly what the risk is. That's actually comforting. The danger isn't ignorance -- it's impatience.

Hidden Assumptions

The market is making several hidden assumptions that deserve scrutiny:

Assumption 1: The lease won't be renewed. The stock's 1.0x EV/EBITDA implies the market assigns essentially zero terminal value to the operating business. But this ignores the powerful interests aligned toward renewal. Sentosa Development Corporation needs the marina to maintain Sentosa Cove's appeal to wealthy residents. The Singapore government has invested billions in Sentosa's tourism infrastructure. A derelict marina would destroy property values in the S$2M-30M Sentosa Cove condo market. The real question is not IF renewal happens, but at WHAT COST.

Assumption 2: The cash hoard is trapped. The market may assume the Tay family will never distribute the excess S$66M in liquid assets. But Arthur Tay owns 54% of the company -- any value extraction through dividends benefits him more than anyone. The recent increase from 2c to 5c per share dividend shows willingness to return capital. And with the operating business generating another S$6-7M in FCF annually, the cash pile keeps growing.

Assumption 3: The Malaysian failure defines management quality. The Puteri Harbour JV was indeed a S$40M mistake. But the lesson has been learned -- the new expansion strategy (management contracts in Phuket and Indonesia) is capital-light, requiring only consultancy and the ONEĀ°15 brand. This is precisely the right pivot: monetize the brand without risking the balance sheet.

Assumption 4: Illiquidity equals risk. With only 80,000 shares traded daily (S$72K), this stock is essentially uninvestable for institutions. But for a patient individual investor, illiquidity is a feature, not a bug. It's the reason the stock is mispriced in the first place. Graham's "Mr. Market" offers you a bargain precisely because most people can't or won't buy it.

The Contrarian View

For the bears to be right, you'd need to believe:

  1. The Singapore government would allow a world-class marina (International Marina of the Year, twice) to shut down, destroying the lifestyle ecosystem of Sentosa Cove's multi-billion-dollar residential development.

  2. The Tay family, with 54% of their wealth tied to this company, would allow the cash hoard to be squandered rather than returned to shareholders (including themselves).

  3. Asia's luxury yachting market -- growing at ~10% CAGR, driven by the fastest UHNW wealth creation on the planet -- would somehow not need Singapore's only private superyacht facility.

  4. A company that has been profitable every single year since 2008, including through COVID, would somehow destroy value going forward.

Each of these is possible individually. All four occurring simultaneously? That's the real tail risk -- and it seems remote.

However, there is a sophisticated bear case worth respecting: the lease renewal could come with a rent increase so severe that it destroys the economics. If Sentosa Development Corporation sees the same EBITDA margins we see and demands 50-70% of operating profit as rent, the business becomes mediocre overnight. The marina's monopoly power works both ways -- the landlord knows you can't relocate 272 berths and 3,800 members.

Simplest Thesis

SUTL Enterprise trades at 1.0x EV/EBITDA because the market prices in lease expiry, but the S$66M liquid asset floor plus S$35M guaranteed future revenue means you're paying close to nothing for a profitable monopoly that will most likely be renewed.

Why This Opportunity Exists

This mispricing persists for structural reasons that won't self-correct quickly:

  1. No analyst coverage. Zero sell-side analysts follow this S$80M micro-cap. It doesn't show up in any institutional screen.

  2. SGX micro-cap stigma. Singapore's stock market has shrunk as companies delist. Institutional investors have fled SGX small-caps for Hong Kong and US markets.

  3. Controlling family discount. Minority shareholders in family-controlled SGX companies have been burned before. The market applies a blanket discount regardless of actual governance quality.

  4. Lease anxiety creates a "melting ice cube" narrative. Even though the economics are strong today, the declining PP&E book value each year reinforces the narrative that value is eroding.

  5. No catalyst in sight. Without a specific event to close the gap -- a lease renewal announcement, a special dividend, a privatization bid -- the stock can remain cheap indefinitely.

This is classic Klarman territory: the opportunity exists because of institutional constraints (too small, too illiquid, too obscure), not because the business is impaired. But patience is required -- potentially 3-5 years of patience.

What Would Change My Mind

I would abandon this thesis if:

  1. Sentosa Development Corporation signals non-renewal -- any official communication suggesting the lease will not be extended, or that the land is earmarked for redevelopment.

  2. Net liquid assets decline below S$40M -- would indicate cash is being deployed in value-destroying ventures rather than accumulated for shareholders.

  3. Arthur Tay increases parent company transactions materially -- any significant related-party deal that transfers value from SUTL Enterprise to SUTL Global.

  4. Membership count drops below 3,000 -- would indicate structural demand decline for the marina product.

  5. Deferred membership income acceleration -- if the company starts recognizing deferred income faster (shortening the amortization period), it would inflate near-term profits while depleting the guaranteed future revenue.

Each of these is falsifiable and measurable. I can check each one annually from the published financial statements.

The Soul of This Business

At its core, SUTL Enterprise is a concession business -- like a toll bridge or an airport, but for yachts. The soul of the business is the LOCATION. Everything else -- the brand, the memberships, the yacht charters, the hotel -- is built on the irreplaceable fact that ONEĀ°15 sits on the only private marina waterfront in Singapore.

This makes it both incredibly strong (monopoly within its lease period) and incredibly fragile (everything depends on the lease). It's a paradox that defines the investment case.

The Tay family understands this. Their expansion into Phuket and Indonesia isn't just growth for growth's sake -- it's an attempt to build a brand that outlives any single location. If ONEĀ°15 becomes the "Four Seasons of marinas," the management contract business could eventually be worth more than the Sentosa concession itself.

But we're not there yet. Today, ONEĀ°15 Sentosa IS the business. And so the lease question IS the investment question.

Buffett would ask: "Would I be comfortable owning this business for 20 years?" The honest answer is: "I'd be very comfortable owning it for 8 years." And at the right price, 8 years of S$6-7M annual free cash flow plus S$66M of liquid assets plus a probable (but uncertain) lease renewal is a compelling bet.

The key is price. At S$0.60, this is a no-brainer -- you're buying the cash at a discount and getting the marina for free. At S$0.895, it's interesting but not screaming cheap. The patient investor waits for Mr. Market to have a bad day and offer this asset at a price that eliminates the need to be right about the lease.

That's the discipline. That's the soul of value investing. Don't hope for the best case. Buy at a price where even the worst case doesn't hurt.

Executive Summary

3-Sentence Investment Thesis

SUTL Enterprise is a family-controlled marina operator with a near-monopoly on premium superyacht berthing in Singapore through its award-winning ONEĀ°15 Marina Sentosa Cove, generating consistent S$8-9M annual profits and S$5-10M free cash flow from a capital-light, recurring-revenue business model. Trading at just 9.7x earnings with S$66M in liquid assets (cash + financial instruments) against a S$80M market cap -- effectively giving you the entire marina business, S$35M of deferred membership income, and the ONEĀ°15 brand for nearly nothing -- this is a deeply undervalued asset play with strong owner-operators. The primary risk is the Sentosa land lease expiring circa 2034 (~8 years remaining), though the company's net liquid assets alone approach the entire market capitalization, providing a substantial margin of safety.

Key Metrics Dashboard

Metric Value Assessment
Market Cap SGD 79.5M Micro-cap
P/E (TTM) 9.7x Cheap
P/B 1.20x Fair
P/B (adjusted incl. deferred membership) 0.79x Cheap
EV/EBITDA 0.9x Extremely cheap
Dividend Yield 5.6% Attractive
ROE 12.9% Good
ROIC ~18.5% Excellent
FCF Yield 6.7% Strong
Net Cash SGD 22.9M Fortress
Liquid Assets (Cash + Financial Assets) SGD 66.3M 83% of market cap
Deferred Membership Income SGD 35.2M Hidden value

Recommendation

WAIT -- Accumulate below SGD 0.75, Strong Buy below SGD 0.60

The business quality is good but not exceptional (lease risk caps the moat duration). At current prices the margin of safety is moderate. A pullback to the S$0.70-0.75 range would provide a more compelling entry, offering near-100% coverage by liquid assets alone.

Phase 0: Business Understanding

What Does SUTL Enterprise Do?

SUTL Enterprise Limited is Singapore's only listed marina operator. Founded by the Tay family, it is headquartered in Singapore and primarily operates the ONEĀ°15 Marina Sentosa Cove -- a 272-berth marina and lifestyle club located on Sentosa Island.

Revenue Streams (FY2024: S$39.6M total):

  1. Sales of Goods and Services (74% -- S$29.3M): Marina berthing fees, hotel rooms (26 rooms), F&B (Latitude Restaurant), yacht chartering (50+ yacht fleet via ONE15 Luxury Yachting), utilities, and events.

  2. Membership Fees and Management Fees (26% -- S$10.4M): Recurring recognition of deferred entrance fees from ~3,800 club members (entrance fee ~S$60,000, recognized over the membership tenure) plus management fees from overseas marinas.

  3. Interest Income (reported in Other Income -- S$2.0M): The company earns material interest income by investing its substantial cash holdings in Singapore T-bill-linked credit notes.

Geographic Breakdown:

  • Singapore: 99.8% of revenue (S$39.5M)
  • Malaysia: 0.2% (S$97K, winding down)

Business Model Characteristics:

  • Negative working capital: Membership entrance fees collected upfront, recognized over tenure
  • Float-like economics: S$35.2M of deferred membership income sits on the balance sheet as a liability but represents prepaid future revenue
  • Capital-light maintenance: Only S$1.5M annual CapEx required once built
  • Near-monopoly: Only private marina in Singapore with CIQ (Customs/Immigration/Quarantine) facilities for superyachts

Corporate Structure

  • Parent: SUTL Global Pte Ltd (53.45% ownership, privately held by Tay family)
  • CEO: Arthur Tay Teng Guan (since May 2010; also Chairman/CEO of SUTL Group)
  • Arthur Tay's total interest: 54.56% (1.11% direct + 53.45% deemed via SUTL Global)
  • Free float: 45.44%
  • Listed on SGX Main Board since 2000
  • 88.8M shares outstanding

Key Subsidiaries

Entity Ownership Activity
SUTL Marina Development Pte Ltd 100% ONEĀ°15 Marina Club operations
ONE15 Luxury Yachting Pte Ltd 100% Yacht chartering (50+ yachts)
ONE15 Management and Technical Services 100% Marina consultancy/management
One15 Marina Holdings Pte Ltd 100% Investment holding

Expansion Pipeline

  • ONEĀ°15 Marina Panwa Phuket (Thailand): Management contract commenced 2024; loan of S$1.4M disbursed for berth construction
  • Nirup Island Marina (Indonesia): Management contract, opened July 2023
  • Singapore Yachting Festival: Launched 2024, 45% increase in yacht displays; new revenue stream
  • Malaysia exit: Divesting remaining Malaysian assets (freehold land sold to Nadi Eltra Sdn Bhd)

Phase 1: Risk Analysis (Inversion -- "How Can This Investment Fail?")

Risk Register

# Risk Probability Severity Expected Loss Mitigation
1 Sentosa lease non-renewal (2034) 20% -70% -14.0% Net liquid assets cover market cap; brand can relocate
2 Lease renewed on unfavorable terms 30% -30% -9.0% Strong member base creates negotiating leverage
3 Controlling family self-dealing 15% -25% -3.8% Related party transactions disclosed; board has independents
4 Marina demand structural decline 5% -50% -2.5% Asia UHNW growth trend supports marina demand
5 Interest rate decline reducing income 25% -10% -2.5% S$2M interest income would reduce with lower rates
6 Singapore regulatory changes 10% -20% -2.0% Sentosa Development Corp controls island development
7 Liquidity trap (illiquid stock) 40% -5% -2.0% Average daily volume only 80K shares (~S$72K/day)
8 Management contract failures 20% -5% -1.0% Brooklyn Marina already bankrupt/sold; Phuket/Indonesia early stage
9 Membership attrition accelerates 10% -15% -1.5% Net additions still positive; 3,800 members
10 Climate/environmental risk 5% -15% -0.8% Sea-level rise; Sentosa is low-lying

Total Expected Downside: -39.1%

Deep Dive: The Lease Risk (Critical)

The single most important risk factor is the Sentosa land lease, which expires circa 2034 (~8 years from now). Key considerations:

Bear Case:

  • Sentosa Development Corporation (SDC) could choose not to renew the lease
  • Even if renewed, terms could be substantially more expensive
  • The leasehold land (carrying value S$15.3M) and building (S$28.5M) would become worthless without renewal
  • As the lease shortens, the property depreciates on balance sheet, reducing book value

Bull Case:

  • ONEĀ°15 Marina has invested >S$70M in infrastructure at this site
  • 3,800 members with S$35.2M of deferred membership income creates strong continuity incentive
  • The marina is integral to Sentosa Cove's residential and lifestyle ecosystem
  • Singapore government has invested heavily in Sentosa as a tourism/lifestyle destination
  • ONEĀ°15 has won "International Marina of the Year" twice (2021, 2023) -- a flagship asset
  • Renewal precedents exist for quality tenants on Sentosa

My Assessment: The lease will most likely be renewed, but on more expensive terms. The current market price already partially discounts this risk (cheap valuation). The S$66.3M in liquid assets provides a floor value even in a worst case.

Deep Dive: The Governance Risk

Arthur Tay controls 54.56% of the company and serves as both CEO and majority owner of the parent SUTL Global. This creates classic minority shareholder risk:

Concerns:

  • SUTL Global (parent) has other businesses; conflicts of interest possible
  • Related party transactions exist (shared office space, services)
  • CEO compensation not fully transparent (directors' fees only S$280K total)
  • Failed S$40M Malaysian JV (Puteri Harbour) destroyed significant value

Mitigating Factors:

  • Board has 2 independent directors out of 5 (Richard Eu, Yeo Wee Kiong)
  • Richard Eu (Chairman) is a respected business leader (Eu Yan Sang)
  • Dividend policy is shareholder-friendly (5 cents/share, ~50% payout)
  • Arthur Tay's interest is aligned -- his wealth is tied to SUTL Enterprise

Phase 2: Financial Analysis

5-Year Income Statement Summary

Metric (S$'000) FY2024 FY2023 FY2022 FY2021 FY2020
Revenue 39,620 40,112 38,132 31,882 27,035
Operating Expenses (32,216) (33,785) (33,384) (29,568) (25,675)
Profit Before Tax 10,806 9,681 8,102 4,502 3,624
Income Tax (2,403) (2,199) - - -
Profit After Tax 8,403 7,482 7,524 4,917 3,179
Profit to Owners 8,525 8,091 7,524 4,917 3,179
Basic EPS (cents) 9.66 9.31 8.70 5.72 3.72
Dividend/Share (cents) 5.00 5.00 5.00 2.00 2.00
EBITDA 16,519 15,277 13,714 10,180 9,756

Revenue CAGR (5yr): 10.0% Profit CAGR (5yr): 21.5% EBITDA CAGR (5yr): 14.1%

Margin Analysis

Margin FY2024 FY2023 FY2022 FY2021 FY2020
Gross Margin (est.) ~84% ~86% ~85% ~84% ~82%
Operating Margin 20.9% 18.5% 20.3% 14.8% 14.5%
EBITDA Margin 41.7% 38.1% 36.0% 31.9% 36.1%
Net Margin 21.2% 18.7% 19.7% 15.4% 11.8%
Tax Rate 22.2% 22.7% ~1% ~1% ~12%

Note: Pre-2023 tax rates were abnormally low due to tax loss carryforwards and deferred tax adjustments. The normalized tax rate is ~22% (Singapore corporate rate: 17% + surcharges).

Balance Sheet Highlights (S$'000)

Metric FY2024 FY2023 FY2022 FY2021 FY2020
Cash 27,066 35,264 25,742 46,700 50,370
Other Financial Assets 39,187 26,923 29,611 - -
Total Liquid Assets 66,253 62,187 55,353 46,700 50,370
PP&E 52,600 56,923 59,684 62,449 72,133
Total Assets 125,382 127,038 124,377 121,060 131,350
Total Debt 4,036 5,067 6,267 6,650 5,760
Deferred Membership Income 35,222 39,358 43,293 - -
Total Equity 66,126 62,018 57,550 51,640 58,590
Equity to Owners 70,045 65,566 57,550 51,640 58,590
Net Asset Value/Share (cents) 79.00 74.94 66.80 60.10 68.40

Key Balance Sheet Observations:

  1. Liquid assets (S$66.3M) = 83% of market cap. You're paying only S$13.2M for the entire marina business.
  2. Deferred membership income (S$35.2M) is classified as a liability but represents guaranteed future revenue -- it's pre-paid, non-refundable entrance fees.
  3. Adjusted book value including deferred membership income: S$66.1M + S$35.2M = S$101.3M, or S$1.14/share -- 27% above the current price.
  4. PP&E declining from S$72.1M (2020) to S$52.6M (2024) as the leasehold asset depreciates toward 2034 lease expiry.
  5. No significant bank debt. The S$4.0M "loans from non-controlling interests" bear 5.5% interest and are related to the Malaysian operations.

Cash Flow Analysis (S$'000)

Metric FY2024 FY2023 FY2022 FY2021 FY2020
Operating Cash Flow 6,813 9,979 11,180 7,740 9,520
CapEx (1,476) (1,129) (960) (2,000) (6,620)
Free Cash Flow 5,337 8,850 10,220 5,740 2,900
Dividends Paid (4,434) (4,373) (1,720) (1,710) (1,730)
Interest Income 2,049 1,825 - - -

FCF CAGR (5yr): 13.0% Average Annual FCF (5yr): S$6.6M Normalized FCF: S$6-7M (adjusting for working capital fluctuations)

Owner Earnings Calculation (Buffett Method)

Reported Net Income (2024):           S$8,525K
+ Depreciation & Amortization:        S$5,713K
- Maintenance CapEx (estimated):      (S$1,500K)
- Non-cash membership income:         (S$4,141K)  [deferred income recognized]
+ Actual membership cash received:     S$108K     [new members in 2024]
= Owner Earnings:                      ~S$8,705K

At S$79.5M market cap, owner earnings yield = 10.9%

ROE Decomposition (DuPont)

Component FY2024 FY2023
Net Profit Margin 21.5% 20.2%
Asset Turnover 0.316x 0.316x
Financial Leverage 1.79x 1.94x
ROE 12.2% 12.3%

ROE is moderate at 12%, held back by the massive liquid asset base. If excess cash were distributed, ROE on operating assets would be substantially higher.

ROIC Calculation

NOPAT = EBIT Ɨ (1 - tax rate) = S$10,806K Ɨ 0.78 = S$8,429K
Invested Capital = Total Equity + Debt - Excess Cash
                 = S$66,126K + S$4,036K - S$50,000K (excess)
                 = S$20,162K
ROIC = S$8,429K / S$20,162K = 41.8%

On a more conservative basis using total invested capital without subtracting excess cash:

ROIC = S$8,429K / S$70,162K = 12.0%

The true operational ROIC is excellent -- the marina generates high returns on the capital actually employed in operations.

Valuation

Enterprise Value Calculation

Market Cap:                    S$79,470K
+ Debt (NCI loans):            S$4,036K
- Cash:                       (S$27,066K)
- Other Financial Assets:     (S$39,187K)
= Enterprise Value:            S$17,253K

EV/EBITDA = S$17.3M / S$16.5M = 1.0x -- This is absurdly cheap.

DCF Valuation (10-Year Model)

Assumptions:

  • FCF Year 1: S$6.5M (normalized)
  • Growth Years 1-8: 3% (moderate, constrained by lease expiry)
  • Terminal value: Zero (conservative -- assume lease expires and is NOT renewed)
  • Discount rate: 10%
Year 1: S$6.50M / 1.10 = S$5.91M
Year 2: S$6.70M / 1.21 = S$5.53M
Year 3: S$6.90M / 1.33 = S$5.18M
Year 4: S$7.10M / 1.46 = S$4.86M
Year 5: S$7.32M / 1.61 = S$4.54M
Year 6: S$7.54M / 1.77 = S$4.26M
Year 7: S$7.76M / 1.95 = S$3.98M
Year 8: S$7.99M / 2.14 = S$3.73M
PV of FCFs: S$37.99M

+ Remaining deferred membership income returned to equity at year 8: ~S$20M / 2.14 = S$9.35M
+ Net liquid assets today (cash + financial assets - debt): S$62.2M

DCF Value (ZERO terminal value): S$62.2M + S$38.0M + S$9.4M = S$109.6M
Per share: S$1.23

DCF Value with lease renewal (60% probability):

If renewed, terminal value at Year 8 = S$8M FCF / (10% - 2%) = S$100M
PV of terminal = S$100M / 2.14 = S$46.7M
DCF with renewal = S$62.2M + S$38.0M + S$46.7M = S$146.9M
Per share: S$1.65

Probability-weighted DCF:

60% Ɨ S$1.65 + 40% Ɨ S$1.23 = S$0.99 + S$0.49 = S$1.48/share

Current price S$0.895 implies ~40% upside to probability-weighted fair value.

Liquidation Value (Floor)

Cash:                          S$27.1M
Financial Assets:              S$39.2M
Trade Receivables:              S$3.4M
Inventories:                    S$0.2M
- Current Liabilities:        (S$20.0M)
= Net Current Asset Value:     S$49.9M (S$0.56/share)

Even in liquidation, the downside is limited to ~37% from current price.

Phase 3: Moat Analysis

Moat Type: Local Monopoly / Concession + Brand

Rating: NARROW (but deep within its niche)

Source 1: Regulatory/Concession Monopoly

  • ONEĀ°15 is the only private marina in Singapore with CIQ facilities -- superyachts requiring customs/immigration clearance have no alternative
  • The Sentosa land lease is effectively a government concession -- new competitors cannot easily enter
  • Singapore has extremely limited waterfront land -- no new marina licenses are being issued in the Sentosa area
  • Evidence: Near-100% occupancy; 2.5-year waiting list reported in 2016

Source 2: Switching Costs / Member Lock-in

  • Non-refundable entrance fee of ~S$60,000 per member
  • 3,800 members locked into long-term memberships
  • S$35.2M of deferred membership income represents the "float"
  • Yacht owners face high switching costs: moving a yacht, losing berth access, losing club privileges
  • Evidence: Membership additions still positive despite minimal marketing

Source 3: Brand / Reputation

  • 8-time Asian Marina of the Year
  • 2-time International Marina of the Year (highest industry accolade)
  • First Platinum Gold Anchor marina in Southeast Asia
  • ONEĀ°15 brand expanding internationally (Phuket, Indonesia)
  • Evidence: Premium positioning attracts UHNW clientele; strong repeat visitation

Moat Duration Assessment

The moat is time-limited by the land lease. Without the Sentosa location, the moat would be significantly diminished. The brand has value for management contracts, but the core economic moat depends on the physical asset.

  • With lease renewal: Moat could last 30+ more years (narrow but durable)
  • Without lease renewal: Moat expires ~2034; brand value for management contracts remains
  • Trend: Stable to slightly narrowing (lease duration decreasing, but brand expanding regionally)

Phase 4: Decision Synthesis

Quality Assessment

Factor Score Notes
Business simplicity 9/10 Marina operations are straightforward
Profitability track record 7/10 Profitable since 2008; only dip was COVID
FCF consistency 8/10 Always positive; averaging S$6.6M/year
ROE quality 6/10 12% dragged down by excess cash
ROIC quality 8/10 >18% on operating capital
Debt management 9/10 Essentially debt-free; net cash position
Management alignment 7/10 54% ownership; family-controlled
Moat durability 5/10 Strong but lease-limited
Dividend discipline 8/10 Consistent 5c/share; ~50% payout
Capital allocation 6/10 Conservative; large cash hoard; failed Malaysia JV
Total 73/100 B+ Quality

Position Sizing

Given the micro-cap nature, illiquidity, and lease risk, this should be a small position (2-4% of portfolio maximum).

Kelly Criterion Estimate:

  • P(win) = 65%
  • Win size = 40% (to fair value)
  • P(loss) = 35%
  • Loss size = 30% (to liquidation)
  • Kelly% = (0.65 Ɨ 0.40 - 0.35 Ɨ 0.30) / 0.40 = 39% -- but adjust dramatically for illiquidity and uncertainty
  • Practical position: 2-3% of portfolio

Entry Strategy

Trigger Price P/E Action
Strong Buy Below S$0.60 <6.2x Full position (3-4%)
Accumulate S$0.60-0.75 6.2-7.8x Build position (2-3%)
Hold S$0.75-1.00 7.8-10.4x Hold existing position
Trim Above S$1.20 >12.4x Reduce to 1%
Sell Above S$1.50 >15.5x Exit

Monitoring Triggers

Metric Current Yellow Alert Red Alert
Revenue S$39.6M <S$35M <S$30M
Operating Margin 20.9% <15% <10%
Cash + Financial Assets S$66.3M <S$50M <S$35M
Dividend per Share 5.0 cents <3.0 cents Suspended
Deferred Membership Income S$35.2M <S$30M <S$25M
Lease Renewal News None yet No update by 2030 Non-renewal announced
Member Count ~3,800 <3,500 <3,000

What Would Make This a Strong Buy Today?

  1. Announcement of lease renewal (removes the biggest risk)
  2. Special dividend of excess cash (S$0.20-0.30/share)
  3. Stock price drop to S$0.60 (provides 50%+ margin of safety)
  4. Management contract revenue scaling meaningfully (Phuket, Indonesia)

What Would Make Me Reject This?

  1. Confirmation of lease non-renewal
  2. Major related-party transaction extracting value
  3. Significant decline in membership numbers
  4. Dividend cut without clear strategic rationale

Appendix A: Deferred Membership Income Analysis

The deferred membership income is a crucial and often misunderstood element of SUTL's balance sheet.

What it is: When a member joins ONEĀ°15 Marina Club, they pay a non-refundable entrance fee of approximately S$60,000. This is recognized as revenue on a straight-line basis over the membership tenure period (estimated 10-15 years).

Balance at 31 Dec 2024:

  • Current (recognized within 1 year): S$3,619K
  • Non-current: S$31,603K
  • Total: S$35,222K

Movement in FY2024:

  • Opening: S$39,358K
  • New additions: S$108K (very few new members)
  • Cancellations: (S$103K)
  • Recognized as revenue: (S$4,141K)
  • Closing: S$35,222K

Key Insight: This S$35.2M is guaranteed future revenue that will be recognized regardless of whether new members join. It's analogous to an insurance company's unearned premium reserve -- real cash already collected that must flow through the income statement. Adding this to equity gives an "adjusted book value" of S$101.3M (S$1.14/share), making the stock look even cheaper.

Appendix B: Property Value Sensitivity

Scenario PP&E Value Liquid Assets Deferred Income Total Value Per Share
Lease renewed (book value) S$52.6M S$66.3M S$35.2M S$154.1M S$1.74
Lease renewed (50% premium) S$78.9M S$66.3M S$35.2M S$180.4M S$2.03
Lease NOT renewed (zero PP&E) S$0 S$66.3M S$35.2M S$101.5M S$1.14
Liquidation (net current assets) S$0 S$49.9M S$0 S$49.9M S$0.56

Analysis based on 5 years of annual reports (2020-2024), audited financial statements, and independent calculations. No analyst reports or secondary research were used as primary inputs.