KOON HOLDINGS LIMITED INVESTOR PRESENTATION (SEPTEMBER 2012)

Transcription

1 KOON HOLDINGS LIMITED INVESTOR PRESENTATION (SEPTEMBER 2012)

2 Disclaimer The information contained in this presentation is strictly confidential. This presentation and the information contained herein may not be reproduced, disclosed or distributed to any other person. By viewing and/or reading this presentation, you agree not to reproduce, disclose or distribute, in whole or in part, the contents of this presentation and agree to be bound by the limitations and restrictions described herein. This presentation does not constitute an invitation or an offer to sell, or solicitation of an offer to buy any securities on in connection with, any contract or commitment whatsoever. This presentation has been prepared exclusively for the parties presently being invited for the purposes of discussion. Information contained in this presentation does not constitute a prospectus or offering circular in whole or in part. 2

3 Infrastructure Specialist With a Strategic Focus on Precast & Investments Key Facts 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 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 11 th July 2003 Listed on Singapore Exchange Securities Trading Limited (SGX) SESDAQ on 21 st July 2003 and was upgraded to Main Board on 4 th February

4 Synergistic Business Model 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 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 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

5 Corporate Structure Infrastructure Construction & Civil Engineering Precast Concrete Works Property Electric Power Generation Koon Construction & Transport Econ GPS Tesla Entire Construction Contech Entire Engineering 5

6 INFRASTRUCTURE CONSTRUCTION & CIVIL ENGINEERING

7 Infrastructure Construction & Civil Engineering Introduction Infrastructure Construction and Civil Engineering Infrastructure Reclamation Environmental Engineering 1. Container/Terminal Yard 2. Marine Structure 3. Drainage 4. Road/Highways 1. Shore Protection 2. Dredging 3. Sandfiling 1. Sewage 2. Water/Drains 3. Power 4. Soil Improvement Work BCA A1 category in construction-civil engineering (eligible to tender for public projects of unlimited value) 7

8 Infrastructure Construction & Civil Engineering Competitive Strengths Wide Range of Infrastructure Construction & Civil Engineering Solutions 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 Strong Industry Recognition Strategic partnership with international marine engineering and construction companies such as Penta-Ocean, Boskalis International, China Harbour and Hyundai Experienced Management Team With over 30 years of experience and accumulated capabilities, the experienced management team has successfully completed various large scale private and public projects Serangoon Reservoir Awarded the BCA Construction Excellence Award 2012 in Civil Engineering for Serangoon Reservoir project 8

9 Infrastructure Construction & Civil Engineering General Profile of Koon s Contracts 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 Outstanding Order book of S$130.8 million as at 27 Aug

10 Infrastructure Construction & Civil Engineering Order Book Current domestic projects Project Rehabilitation and Earthworks at Landfill Site off Tampines Road Total contract value (S$ mil) Seletar Link and Widening of TPE Infrastructure Works at PSA s Pasir Panjang Terminal Infrastructure Works at Changi East Tampines Logistics Park Infrastructure Works Construction of Sea Water Intake Facilities Shore protection works at Jurong Island Remaining contract value (S$ mil) 10

11 Infrastructure Construction & Civil Engineering Track Record Wetland at Lorong Halus Pang Sua Canal Sentosa Cove 11

12 Infrastructure Construction & Civil Engineering Industry Outlook (S$ bil) (forecast) Public sector Private sector (forecast) Total value Source: BCA (11 January 2012) S$ bil (forecast) Public sector Private sector Total value Note: (1) Chart represents maximum range of forecast 12

13 PLANT AND EQUIPMENT RENTAL

14 Plant & Equipment Rental Centralised Procurement Internal Usage Rental Cost Savings and Maximise Utilisation Rate 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. 14

15 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 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. Hydraulic Crawler Crane Hydraulic Excavator Grab Dredger 15

16 PRECAST CONCRETE WORKS

17 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 Increased Productivity Time and Cost Savings Quality Control 17

18 Precast Concrete Works Introduction Key Facts 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 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 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 18

19 Precast Concrete Works Order Book Estimated Market Share Precast Order Book 16% Econ & Contech S$51 mil S$69 mil 84% Other Precasters As at Aug 2012 As at Aug

20 Precast Concrete Works Yards & Facilities Singapore (Kranji Yard) Malaysia (Johor Yard) Singapore (Bukit Batok Yard) Singapore Production Capacity (m 3 /mth) Land Area (m 2 ) 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 20

21 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: 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 21

22 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 22

23 Precast Concrete Works Product Range Prestressed Beams Ring Segment Water Tank RC Piles Reinforced Concrete Pipes Insert Pictures Space Adding Item 23

24 Precast Concrete Works Track Record Tunnel Segment (MRT, DTSS) Sengkang LRT Project 24

25 Precast Concrete Works Track Record Lift Shaft Volumetric Staircase Tunnel 25

26 Precast Concrete Works Industry Outlook Units New flats under BTO 30,000 25,000 25,000 25,000 20,000 17,700 15,000 10,000 5, (forecast) Source: HDB 26

27 Precast Concrete Works Industry Outlook 27

28 Property

29 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 29

30 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 Watercolours Executive Condominium Growing synergies from its real estate agency unit 30

31 INVESTMENTS

32 Investments Tesla Key Facts Owns 71.2% equity stakes in Tesla for a total consideration of approximately A$10.5 million. Tesla has been allotted capacity credits to generate power by Western Australian Independent Market Operator ( IMO ), allowing it to access and supply electricity to the state grid system Capacity credits provide an incentive for the initial capital investment by granting power generators a recurring source of income Commenced operation of its first 9.9MW diesel power plant in Western Australia (A$ million or S$ million) in August 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 32

33 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 33

34 Investments Tesla A$ per MW Maximum Reserve Capacity Price 260, , , , , , , , , / / / / / / /2015 Source: Independent Market Operator of Western Australia 34

35 1H12 FINANCIAL HIGHLIGHTS

36 Income Statement Year end: 31 Dec S$ mil 1H12 1H11 Change Comments Revenue % 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 % Key contributions from the Precast division. Partially offset by lower gross profit margin contracts from the Construction division 36

37 Income Statement Year end: 31 Dec S$ mil 1H12 1H11 Change Comments Other Income (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) % In line with the sales increase from the Precast division Addition of marketing and advertising expenditure from Property division Net Profit (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 37

38 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 % 9.8% 41.5% Construction Electric 48.2% Precast Property 82.3% 0.5% 1H11 1H12 38

39 Balance Sheet Healthy balance sheet with net cash position (S$ mil) As at 30 June 2012 As at 31 December 2011 % Change Current Asset Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Total equity Cash and cash equivalents of S$16.3 million as at 30 Jun

40 Interim Dividend 1 Interim dividend Singapore cents H11 1H12 40

41 Key Financial Ratios 1H12 1H11 Gearing (1) 0.16x 0.08x Debt To Equity Ratio (2) Return On Equity (ROE) 1.0% 12.0% Earnings Per Share (Singapore cents) (3) Net Tangible Value Per Ordinary Share (Singapore cents) 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 41

42 GOING FORWARD

43 Four Pillars of Growth Infrastructure Construction & Civil Engineering Precast Concrete Works Property Investments 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 margincentric business approach 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 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 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 Moving up the valuechain Platform for Business Diversity and Growth 43

44 END OF PRESENTATION