Singapore maritime service provider Pinnacle Marine IPO in Hong Kong: accumulated dividends of nearly 16 million SGD over three years, but now plans to use part of the funds raised to repay loans

According to the Hong Kong Stock Exchange official website, Pinnacle Marine, a comprehensive maritime service provider headquartered in Singapore, recently submitted its IPO (Initial Public Offering) application documents for the first time, with Everbright Securities as the exclusive sponsor.

The prospectus shows that Pinnacle Marine’s revenue and profit increased during the reporting periods of 2023, 2024, and 2025 (hereinafter referred to as “the reporting period”). Revenue grew from SGD 34.9 million to SGD 46.42 million, while net profit rose from SGD 3.78 million to SGD 9.747 million. The company’s core business model revolves around ship activities at Singapore Port, including aluminum workboat construction, workboat leasing and logistics support, shipping agency services, ship supplies, and machinery and spare parts sales.

However, a review of the company’s balance sheet, cash flow statement, and business compliance disclosures in the IPO prospectus by the Daily Economic News (hereinafter “the reporter”) reveals that, despite overall performance growth, the company faces several specific data points and potential risks that warrant market and investor attention, including profit distribution, asset cross-period transactions, supply chain and customer network concentration, and accounts receivable collection cycles.

Large dividends paid during the reporting period, with plans to use part of the funds raised to repay loans

The prospectus shows that Pinnacle Marine’s dividend payments in certain years exceeded its net profit for the same period. For example, in 2023, the company reported a profit of SGD 3.78 million but paid SGD 10.875 million in cash dividends, approximately 2.88 times the net profit for that year.

Source: Pinnacle Marine IPO prospectus

According to the prospectus, at the end of 2023, Pinnacle Marine’s net current liabilities reached SGD 5.8 million, mainly due to accounts payable to shareholders amounting to SGD 6.411 million. The company explained this was due to the combined effect of funds needed for acquiring new port terminal facilities and dividend payments in 2023.

In 2025, Pinnacle Marine again declared SGD 4.973 million in cash dividends. During the reporting period, the company’s cumulative net profit was about SGD 19.593 million, while total dividends declared reached SGD 15.848 million (no dividends were paid in 2024), accounting for over 80% of cumulative net profit.

Despite large dividend payouts, the use of funds raised as disclosed in the prospectus indicates that Pinnacle Marine plans to mainly use the proceeds to acquire and develop new industrial land to expand shipbuilding capacity, fleet, and logistics capabilities, as well as to repay certain outstanding loans. The fundraising includes repaying a bank loan of approximately SGD 8.1 million principal, with an annual interest rate of 2.5%.

Additionally, during the reporting period, Pinnacle Marine conducted a series of sale, leaseback, and subsequent repurchase transactions involving workboat assets, affecting non-recurring gains and losses in each period’s income statement. It was disclosed that in 2023 and 2024, Pinnacle Marine sold five self-built workboats to independent third-party buyers and lessors, then leased them back through financing lease agreements for daily operations.

According to relevant accounting standards, this sale-leaseback arrangement resulted in recognition of rights transfer gains of SGD 15,700 and SGD 25,000 respectively in 2023 and 2024. However, in January 2025, the company terminated all leaseback arrangements and spent about SGD 3.8 million to repurchase these five workboats from the third-party buyer, with the total repurchase cost about 5% higher than the previous total sale price.

To complete this repurchase, the company utilized a SGD 2.5 million revolving credit line approved by a local Singapore bank. As a result of asset repurchase and early termination of lease agreements, the company derecognized related right-of-use assets and lease liabilities, and recognized a one-time termination lease liability gain of SGD 88,900, which increased pre-tax profit for 2025.

Dependence on a single supplier for core components, with overlapping supplier and customer relationships

In terms of supply chain, Pinnacle Marine’s shipbuilding and machinery spare parts procurement are concentrated. During the reporting period, expenditures on mechanical components (including marine engines, generators, and spare parts) were approximately SGD 3.3 million, SGD 5.1 million, and SGD 7.6 million, accounting for 13.6%, 19.7%, and 28% of total annual cost of sales respectively. Most of these procurement funds flowed to Supplier A, a Singapore-based distributor of marine engines and generators, whose parent company is a Chinese state-owned industrial group. Through a distribution agreement with Supplier A, Pinnacle Marine also obtained exclusive distribution rights for certain marine engines and generators in Singapore.

The prospectus discloses that the distribution agreement with Supplier A set minimum annual purchase or sales targets for marine engines, generators, and spare parts, but the company failed to meet these targets during the reporting period. Under the contract, Supplier A has the right to terminate the exclusive distribution arrangement or revoke the company’s exclusive distribution rights. The company stated that Supplier A is aware of this underperformance and has not exercised its termination rights so far. The prospectus also notes that replacing marine power systems would require re-engineering for compatibility and re-approval from end customers and classification societies, which could lead to project delays and potential contractual claims.

Furthermore, there is entity overlap in Pinnacle Marine’s customer and supplier network. The prospectus shows that, due to the nature of the company’s integrated operations, some counterparties act as both customers and suppliers at the same time. During the reporting period, the company had 22, 26, and 24 overlapping customer-supplier entities respectively. Revenue from these overlapping entities was approximately SGD 3.2 million, SGD 4.1 million, and SGD 6.3 million, representing 9.1%, 10%, and 13.6% of total annual revenue. Meanwhile, procurement from these entities was about SGD 5.1 million, SGD 5.7 million, and SGD 4.9 million, accounting for 21.1%, 22%, and 18.1% of total procurement.

The prospectus warns that if these core overlapping counterparties face financial difficulties or choose to terminate cooperation, Pinnacle Marine could experience both a decline in sales revenue and disruptions in its supply chain channels.

Against this backdrop, the company’s overall gross profit margin increased from 30.2% in 2023 to 37.1% in 2024, and further to 41.5% in 2025.

Source: Pinnacle Marine IPO prospectus

Frequent workplace accidents and regulatory penalties, with a high proportion of overdue trade receivables

The reporter also noted that during the reporting period, Pinnacle Marine experienced multiple workplace safety incidents involving employees and third-party contractors.

In 2023, a worker’s foot was cut off after being entangled in a propeller while working on a company-operated workboat, resulting in about SGD 144,500 in compensation paid; in 2024, another worker was injured while cleaning a ship’s shaft with sandpaper at the port facilities, suffering a right palm injury and swelling, with about SGD 13,800 paid in compensation. In December 2024, the company was fined SGD 2,000 by Singapore’s Ministry of Manpower for inadequate control over access to heavy lifting equipment (forklifts), which could allow untrained personnel to operate the machinery, failing to implement reasonable safety measures.

On the financial asset side, the company’s trade receivables include a notable proportion of overdue accounts. The prospectus states that at the end of each reporting period, the total trade receivables were approximately SGD 7.41 million, SGD 6.66 million, and SGD 6.96 million respectively. Overdue but not impaired receivables were SGD 4.6 million, SGD 3.1 million, and SGD 4 million respectively. In 2023, overdue receivables totaled SGD 4.6 million, exceeding the company’s after-tax net profit of SGD 3.78 million for that year.

From an aging perspective, as of each reporting period’s end, overdue accounts exceeding 90 days accounted for 40.5%, 29.4%, and 26.2% of total trade receivables respectively. Correspondingly, the allowance for doubtful accounts at each period’s end was SGD 23,200, SGD 58,100, and SGD 37,300, representing 3.1%, 8.7%, and 5.4% of total trade receivables.

Regarding the contradiction between large dividends and fundraising purposes, as well as supply chain vulnerabilities and overlapping counterparties, the reporter sent interview questions to Pinnacle Marine’s official email on the afternoon of March 4 but had not received a response as of the time of publication.

Daily Economic News