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Disclaimer
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Infrastructure Specialist With a Strategic Focus on Precast & Investments
Key Facts
SGX Stock Code: 5DL
ASX Stock Code: KNH
Bloomberg: KNH:SP
Reuters: KNH.AX
Issued and outstanding shares: 164,208,000
Listed on Australia Stock Exchange (ASX) on 11th July 2003
Listed on Singapore Exchange Securities Trading Limited (SGX) SESDAQ on 21st July 2003 and was upgraded to Main Board on 4th February 2010
Founded in 1977
One of Singapore’s largest civil engineering, precast, reclamation and shore protection specialists
Registered under the A1 category in civil engineering with the Building and Construction Authority (“BCA”), ability to bid for civil engineering projects in Singapore with unlimited contract value
Owns two out of ten precast companies in Singapore with the highest BCA license to tender for precast work with unlimited value
Blue-chip clientele base which includes the Singapore Government
Key Stock Information
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Infrastructure Construction & Civil Engineering
Precast Concrete Works
Property
Electric Power Generation
Primarily engaged in two main sources of infrastructure activities: reclamation and shore protection; and civil engineering Ability to bid for civil engineering projects in Singapore with unlimited contract value Possesses the relevant safety, quality and environmental certifications – ISO 9001:2008, ISO 14001:2004 and OHAS 18001:2007
Operates 3 yards in Singapore and Malaysia (Johor) with more than 23 production lines, spanning a total yard area of 133,000 sqm Approved Precaster for HDB Projects with highest BCA L6 license; ability to bid for precast concrete works in Singapore with unlimited contract value Ability to cross-market precast products and offer more integrated product and services
Owns 71.2% equity stakes in Tesla, an Australian energy infrastructure company which has attained capacity credit allocations from the Independent Market Operator of Western Australia Tesla’s first 9.9MW diesel power plant was commissioned in August 2011 Construction of additional three 9.9 MW diesel power plant is expected to be completed in the second half of 2012
Synergistic Business Model
Owns majority stake in GPS Alliance Holdings Pte. Ltd. that owns premier real estate agency, Global Property Strategic Alliance Pte. Ltd., which is involved in a wide spectrum of real estate services Owns 15% stake in the Joint Venture Company to develop an Executive Condominium at Pasir Ris Strategic expansion into new property-related businesses such as property valuation and advisory service as well as home furnishing
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Corporate Structure
Infrastructure Construction &
Civil Engineering
Precast Concrete Works
Electric Power Generation
Property
Econ
Contech
Tesla GPS Koon
Construction & Transport
Entire Construction
Entire Engineering
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Infrastructure Construction & Civil Engineering
Introduction
Infrastructure
1. Container/Terminal Yard 2. Marine Structure 3. Drainage 4. Road/Highways
Reclamation
1. Shore Protection 2. Dredging 3. Sandfiling
Environmental Engineering
1. Sewage 2. Water/Drains 3. Power 4. Soil Improvement Work
Infrastructure Construction and Civil Engineering
BCA A1 category in construction-civil engineering (eligible to tender for public projects of unlimited value)
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Infrastructure Construction & Civil Engineering
Competitive Strengths
Strategic partnership with international marine engineering and construction companies such as Penta-Ocean, Boskalis International, China Harbour and Hyundai
With over 30 years of experience and accumulated capabilities, the experienced management team has successfully completed various large scale private and public projects
Wide range of products and services increases efficiency and project management capabilities in the time-sensitive infrastructure construction industry with the highest level of BCA certification in Civil Engineering
Wide Range of Infrastructure Construction & Civil Engineering Solutions
Experienced Management Team
Strong Industry Recognition
Awarded the BCA Construction Excellence Award 2012 in Civil Engineering for Serangoon Reservoir project
Serangoon Reservoir
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Infrastructure Construction & Civil Engineering
Public sector tenders for various government agencies such as Housing Development Board, Public Utilities Board, JTC Corporation, etc.
Contract Period: 2 years
Contract Bid Size: S$30 million to S$50 million
Targeted Sectors:
1. Infrastructure (MRT and road)
2. Marine engineering works
3. Coastal protection
4. Land reclamation
5. Water and sewage plant
6. Environmental engineering
General Profile of Koon’s Contracts
Outstanding Order book of S$130.8 million as at 27 Aug 2012
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Infrastructure Construction & Civil Engineering
Order Book
Current domestic projects Project Total contract value
(S$’ mil) Remaining contract value (S$’ mil)
Rehabilitation and Earthworks at Landfill Site off Tampines Road
40.10 31.9
Seletar Link and Widening of TPE 37.90 19.8
Infrastructure Works at PSA’s Pasir Panjang Terminal 2
21.0 21.0
Infrastructure Works at Changi East 15.74 3.40
Tampines Logistics Park Infrastructure Works
15.25 4.56
Construction of Sea Water Intake Facilities 14.70 14.70
Shore protection works at Jurong Island 12.50 12.50
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Infrastructure Construction & Civil Engineering
Track Record
Wetland at Lorong Halus Sentosa Cove Pang Sua Canal
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Infrastructure Construction & Civil Engineering
Industry Outlook
(S$’ bil) 2010 2011 2012 (forecast)
2013 (forecast)
Public sector 8.3 15.2 13.0-15.0
Private sector 17.4 16.8 8.0-12.0
Total value 25.7 32.0 21.0-27.0 19.0-27.0
05
101520253035
2010 2011 2012 (forecast)
Public sector Private sector Total value
S$’ bil
Source: BCA (11 January 2012)
Note: (1) Chart represents maximum range of forecast
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Plant & Equipment Rental
This division, which owns and manages the Group’s plant and equipment focuses on the rental of these plant and equipment to external clients as well as the deployment for internal usage. It allows the Group to centralise its procurement of plant and construction equipment to generate cost efficiencies, while adequately supporting the Group’s construction requirements as well as tap on the opportunities in the robust construction market to maximise utilisation rate of its construction equipment.
Centralised Procurement
Internal Usage
Rental
Cost Savings and Maximise Utilisation Rate
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Plant & Equipment Rental
Construction Machinery: Crawler Cranes Excavators Lorry Cranes Tipper Trucks Vibratory Soil Compactors Wheel Loaders Others
Construction Equipment: Pabool Pump Electrical Submersible Pump Diesel Water Pump Chemical Treatment Plant Others
Hydraulic Crawler Crane Hydraulic Excavator Grab Dredger
Marine Construction Vessels(1): Dredgers
(1) The specialised vessels are strategically retained within the Group to target the robust opportunities in the niche marine construction activities.
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Increased Productivity
Time and Cost Savings
Quality Control
Precast Concrete Works
Benefits of Precast Products
While having minimal cost differences with conventional cast in-situ products, precast products also offer the following advantages: Simplify on-site construction process and reduce wastages; hence generating time and cost savings
Increase productivity; hence reducing the number of foreign workers and thus translating into cost efficiencies for developers
Better quality control as precast works undergo internal and external quality testing
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Precast Concrete Works
Introduction
Key Facts
Acquired 100% of Contech Precast Pte Ltd for S$1.78 million in 27 August 2010
Acquired 75% stake in Econ Precast Pte Ltd for S$3.75 million on 25 March 2010
A total of ten companies in Singapore have the highest license (L6) from Building and Construction Authority of Singapore (“BCA”) for precast concrete works, of which two of these companies are owned by the Group.
Ability to bid for precast concrete works in Singapore with unlimited contract value
Contech Precast is the only qualified local manufacturer for precast tunnel segment used in MRT projects in Singapore
Operates two yards in Singapore and one in Malaysia (Johor) with more than 23 production lines, spanning a total yard area of 133,000 sqm
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Precast Concrete Works
Order Book
16%
84%
Econ & Contech
Other Precasters
Estimated Market Share
As at Aug 2012
S$69 mil
Precast Order Book
S$51 mil
As at Aug 2011
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Precast Concrete Works
Yards & Facilities
Singapore (Kranji Yard) Malaysia (Johor Yard) Singapore (Bukit Batok Yard)
Singapore Production Capacity (m3/mth) Land Area (m2)
RC Piles Precast
Econ 3,000 5,000 38,000
Contech - 7,000 47,000
Sub-total 3,000 12,000 85,000
Malaysia
Econ
6,000 3,000 48,000
Grand Total 9,000 15,000 133,000
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Precast Concrete Works
Competitive Strengths
Comprehensive Range of Precast Products
- With the acquisitions of Econ and Contech, the Group is able to manufacture a portfolio of complementary precast products
- Significant increase in the range of products offered by the precast division
Quality Assurance
- Testament to our commitment to delivering quality products, our precast division is awarded with ISO 9001:2008
- In addition, we have received SS EN 206-1:2009; SS544: Part 1 & 2:2009; SAC CT 06:2010 for the product certification of Ready-Mixed Concrete in July 2010
Trademark and License
- Capability to design and manufacture various types of precast components
- Equipped with highest BCA L6 licenses, we are one of the few precasters in Singapore with the ability to bid for contracts of unlimited value
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Precast Concrete Works
Competitive Strengths
Strong Collective Efforts
- Increased capability and capacity to bid and undertake larger projects by ourselves
- A key factor as we progressively expand the size of our precast order book since August 2010
Track Record
- The combined track record of both companies extends to more than 30 years
- Involvement with projects for several local and overseas developer, contractors and government bodies (such as HDB and LTA)
Partnership and Support from Koon
- Ability to cross-share and implement relevant processes to improve operational efficiency
- Financial support from parent company to obtain better financing terms
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Precast Concrete Works
Product Range
Prestressed Beams
RC Piles
Ring Segment Water Tank
Insert Pictures Reinforced Concrete Pipes Space Adding Item
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Precast Concrete Works
Track Record
Pinnacle@Duxton Tunnel Segment (MRT, DTSS) Sengkang LRT Project
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17,700
25,000 25,000
-
5,000
10,000
15,000
20,000
25,000
30,000
2010 2011 2012(forecast)
Precast Concrete Works
Industry Outlook
New flats under BTO
Source: HDB
Units
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Property
GPS Alliance Holdings
Key Facts
Acquired 51% of the issued capital in GPS Alliance Holdings Pte. Ltd. (“GPS Alliance”), for S$3
million
Based in Singapore, GPS Alliance is an investment holding company that owns premier real estate agency, Global Property Strategic Alliance Pte. Ltd. (“GPS”), which is involved in a wide spectrum of real estate services
GPS Alliance was accorded with one of the five Most Promising Entrepreneurs Award in Global Entrepreneurs Roundtable 2012 held in Kuala Terengganu, Malaysia
Newly-established GPS Alliance Appraisals Pte. Ltd. (“GPS Alliance Appraisals”) to provide property valuation and advisory services
Owned 85% stake in Muse Living Pte. Ltd. (“MUSE”) which provides home furnishings, design consultancy and installation services
Synergistic addition to the Group’s business model; leverage on GPS Alliance’s network and market knowledge in the real estate market to explore property development opportunities
Provide integrated one-stop services from construction, marketing, consultancy, property management and home
furnishing solutions to developers
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Property
Joint Venture in EC Development
Key Facts
Owns 15% stake in the Joint Venture Company (HUGE Development Pte Ltd) to develop Watercolours Executive Condominium at Pasir Ris Drive 3 / Pasir Ris Link
The structure of the Joint Venture Company: EVIA Real Estate Pte Ltd (34%), Maxdin Pte Ltd (30%), Ho Lee Group Pte Ltd (21%) and GPS Alliance Development and Investment (15%)
Maxdin Pte Ltd and Ho Lee Group Pte Ltd have been awarded the tender for the land parcel at the tender price of S$122.2 million
The size of the EC site is approximately 18,500 square metres with estimated dwelling units of 400
The Group’s real estate agency unit, GPS Alliance, will be responsible for the marketing strategy and sales of this residential development
Growing synergies from its real estate agency unit
Watercolours Executive Condominium
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Investments
Tesla
Key Facts
Owns 71.2% equity stakes in Tesla for a total consideration of approximately A$10.5 million. Tesla has been allotted capacity credits to generate power by Western Australian Independent Market Operator (“IMO”), allowing it to access and supply electricity to the state grid system
Capacity credits provide an incentive for the initial capital investment by granting power generators a recurring source of income
Commenced operation of its first 9.9MW diesel power plant in Western Australia (A$7.0-8.0 million or S$9.3-10.6 million) in August 2011. It has also secured sites for the construction of three additional 9.9MW power plants which will be completed in the second half of 2012
Opportunity to leverage on Tesla’s network to tap into the infrastructure industry in Australia
Two-tier revenue structure upon operational of the power plants
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Investments
Tesla
Industry Outlook
Western Australia has seen record breaking power consumption levels over the recent
years, as the state experienced varying weather conditions
Power consumption hit a high of 4,068 MW during the summer (January 2012)
In Australia, when there is insufficient capacity to meet the electricity demand, the government will hold an auction to solicit bids for supply of electricity to the government. Maximum Reserve Capacity Price is the highest price government is willing to pay for any additional electricity supplied per MW annually (see
chart on next slide)
Tesla’s power plants are tailored towards meeting peak demand needs; there will be further opportunity for
increased revenues from electricity generation in the future
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100,000
120,000
140,000
160,000
180,000
200,000
220,000
240,000
260,000
2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015
Source: Independent Market Operator of Western Australia
Maximum Reserve Capacity Price A$ per MW
Investments
Tesla
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Income Statement
S$’ mil 1H12 1H11 Change Comments
Revenue 99.3 35.7 +178.4% An increase in Construction revenue on the back of the Tampines Logistics Park project, the rehabilitation and earthworks at a landfill site off Tampines Road, the construction of the Seletar Link vehicular bridge and the widening of the Tampines Expressway
Higher revenue from the Precast division paralleled increases in contracts
secured Contribution from the new Property division that was acquired in July 2011
Gross Profit
11.0 3.0 +263.8% Key contributions from the Precast division. Partially offset by lower gross profit margin contracts from the Construction division
Year end: 31 Dec
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Income Statement
S$’ mil 1H12 1H11 Change Comments Other Income 1.6 9.6 (83.4%) One-off gain on disposal of leasehold property and non-recurrent dividend
income from Koon Zinkcon of S$5.6m and S$3.0m, respectively in the year ago period
Administrative Expenses
(9.3) (6.4) +45.8% Increased expenses mainly due to the inclusion of the property and electric power generation business
Distribution Costs
(1.7) (0.2) +573.4% In line with the sales increase from the Precast division Addition of marketing and advertising expenditure from Property division
Net Profit 0.5 6.3 (91.4%) Lower profit primarily due to inclusion of $8.6m one-off non operating income in 1H11 arising from the gain on disposal of property and non-recurrent dividend income from Koon Zinkcon
Year end: 31 Dec
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1H12 Revenue Breakdown
Division S$ million Notes
Infrastructure Construction & Civil Engineering
41.3 The 40.5% growth experienced was mainly due to various project completion and project timing
Precast
47.9 Strong growth
Property
9.7 Maiden revenue contribution from the Property division that was acquired in July 2011
Electric power generation 0.5 Maiden revenue contribution from increased stake in Tesla in March 2012
41.5%
0.5%
48.2%
9.8%
Construction
Electric
Precast
Property
82.3%
17.7%
1H11 1H12
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Balance Sheet
(S$’ mil) As at 30 June 2012
As at 31 December 2011
% Change
Current Asset 103.0 79.2 +30.0
Non-current assets 75.3 43.0 +75.2
Total assets 179.3 122.2 +46.0
Current liabilities 90.9 61.4 +48.0
Non-current liabilities 27.6 5.4 +411.8
Total liabilities 118.5 66.8 +77.3
Total equity 59.8 55.3 +8.0
Healthy balance sheet with net cash position
Cash and cash equivalents of S$16.3 million as at 30 Jun 2012
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Key Financial Ratios
1H12 1H11
Gearing(1) 0.16x 0.08x
Debt To Equity Ratio(2) 1.9 0.9
Return On Equity (ROE) 1.0% 12.0%
Earnings Per Share (Singapore cents)(3) 0.33 3.85
Net Tangible Value Per Ordinary Share (Singapore cents) 33.06 31.77
Share price as at 30 Aug 2012 (Singapore cents) 20.5
Note: (1) Gearing = (Bank loans and bill payable + Long term bank loans)/Total Assets (2) Debt To Equity Ratio = ((Total Liabilities - Cash And Cash Equivalents)/Equity attributable to owners of the Company)
(3) Earnings Per Share equals to earnings from continuing and discontinued operations divided by the weighted average number of ordinary shares on issue
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Leverage on our proven track record and capabilities to tap domestic demand for niche construction, marine and civil engineering projects
Ride on the steady demand for infrastructure and civil engineering projects in countries around the region
Continue to undertake projects with a margin-centric business approach
Moving up the value-chain
Infrastructure Construction
& Civil Engineering
Platform for Business Diversity and Growth
Precast Concrete Works Investments
Improve sales and distribution channel and expand product range of precast division
Cross-market precast products to customers of infrastructure construction and civil engineering business units
Expansion into regional markets
Four Pillars of Growth
Strong cash position to fund strategic M&A business opportunities
Continue to explore investment opportunities that create synergies with the Group’s operating businesses
Investments to generate diversified streams of recurring revenue, profit and cash flow back to the Group
Property
Strong management team with proven track record in Singapore’s real estate agency market
Ability to provide integrated one-stop services from construction, marketing, consultancy, property management and home furnishing solutions to developers
Gateway to property development opportunities in the region