OMH - A Compelling Business Model

Up till this stage, the management has successfully built up a very compelling business model of an integrated business centred upon manganese and it’s alloy products ie from (1) upstream as Manganese Miner (first class Tshipi & Bootu Creek), to (2) midstream as Manufacturer (low cost Sarawak smelter), and (3) as Trader (manganese and alloys). I believe this is the realization of the founder’s (Mr Low) vision of integrating the value chain of manganese business and positioning OMH as the only independent integrated manganese player in the market. It takes vision and execution and also courage to bring OMH to where it is now, and definitely not without the ups & downs. Again kudos to Mr Low & his management team.

It has been well discussed in this forum that unfortunate state of its share price is very much attributed to the lack of liquidity (contributed by the lack of interest in such company/business model in the ASX). A secondary listing of OMH in another exchange would allow OMH to be trade-able on two exchanges and be able to tap on a wider investor base in another country that appreciates the value that OMH provides and would certainly brings in the much needed liquidity. Apart from the financial fundamentals, the liquidity of a stock is also a key consideration for most fund managers. A point to note is also AUD currency has also depreciated considerably (more than 30%) over the last few years and continued to be under stress.

I believe the business model of OMH will be very much welcomed by the Asian investors/fund managers in the other exchanges (Malaysia, Singapore and HK). A secondary listing there would definitely solve this immediate problem of the lack of interest, as investors there would be excited about such a business model. This attraction is predicated on the basis of OMH continued to maintain its integrated nature of its business ie mining, smelter and trading all under one tightly-held group. With OMH as the sole listing entity within the group, it will focus the investor attention and coverage on OMH, and would help to attract a more diverse investor base. As compared to other groups with more than 1 listed entity within a group, and those business model unfortunately suffers from a diffuse investor focus and unnecessary divert investor attention away from the main holding company. The current group structure of OMH is ideal and I truly believe it will attract new institutional investor base given the right exchange.