The offshore oil and gas sector has taken a beating over the past year, but local firm Valves.com has weathered the storm, thanks to its overseas business and strong cash flow.
The firm, which distributes valves for the energy, petrochemical and power industries, made its first foray abroad in 2004 when it set up shop in China. Representative offices followed in Indonesia, South Korea and France.
It is now embarking on its next phase of growth with a proposed acquisition of a valve manufacturing business in the United States, while it has plans to tap the Middle East market by the end of next year.
Chief executive Wong Seng Kee says: "The Singapore market is small. I decided to go abroad once my business here stabilised. Had I not done that, I think my business would have plateaued."
Internationalistion helped to double the firm's profitability, he says.
GO BOLDLY FORTH
On going international:
• Learn about other countries’ ways of doing busines
• Build up a strong staff and financial base at home
• Be bold. Don’t be put off by differences
Its customers include global players such as BW Offshore, Modec and Siemens.
Mr Wong, who started the firm 17 years ago, says about half of the company's revenue comes from overseas markets.
Its growth story follows a familiar pattern of other companies that heeded the Government's call to push beyond Singapore.
Valves.com distributes valves from major manufacturers in the US and Europe. It also provides engineering and procurement support services.
Valves are a key component in oil and gas equipment as they control the flow and pressure in pipelines.
The firm's valves are used in projects such as floating production, storage and offloading (FPSO) units - vessels used by the offshore energy industry to process and store oil.
It has 12 employees at its headquarters here and is likely to add two more engineers to support business in the region.
"The market has slowed, but there are still some projects outside Singapore. We are also looking to add one more sales representative in Europe," says Mr Wong, 62, who adds that the company will assign a representative in the Middle East.
The sales representative will work with local partners to tap opportunities in markets such as Oman, Qatar, Saudi Arabia and the United Arab Emirates.
Mr Wong's advice for companies that want to venture abroad include having deeper knowledge about the culture and business environment in overseas markets, building up strong manpower and finances here - and being plucky.
"Have no fear. Don't be put off by differences in other markets," he says.
Apart from seeking out new markets, Valves.com intends to diversify its business by acquiring a manufacturing business in Houston for US$10 million (S$14.2 million). The deal is expected to be closed in the coming weeks.
The acquisition target is a valve manufacturer that the firm has been working with for about seven years.
Mr Wong is unable to disclose the identity of the US company owing to confidentiality reasons, but says the transaction would see Valves.com taking over a 14,000 sq ft manufacturing facility in Houston.
He noted: "The company which we will acquire manufactures for the global market, so we will become a global manufacturer. We will be focusing on this new venture. It has the potential to grow to $50 million or $100 million in the future."
Mr Wong, who trained in mechanical engineering, expects the acquisition to double the firm's revenue within a year. The US firm's ownership of two patents and research and development capabilities should also help Valves.com devise new and more advanced products.