KOON HOLDINGS LIMITED INVESTOR PRESENTATION (JULY 2011)

Transcription

1 KOON HOLDINGS LIMITED INVESTOR PRESENTATION (JULY 2011)

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. Page 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 nine 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: KNX SP Equity Reuters: KNH.AX Issued and outstanding shares: 164,098,000 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 2010 Page 3

4 Synergistic Business Model Infrastructure Construction & Civil Engineering Plant and Equipment Rental Precast Concrete Works Investments 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 To centralise its procurement of plant and construction equipment to generate cost efficiencies Supports the Group s internal construction needs as well as tap on the opportunities in the robust construction market to maximise utilisation rate of its construction equipment. Operates 3 yards in Singapore and Malaysia (Pontian) with more than 18 production lines, spanning a total yard area of 116,245 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. New business segment is focused on creating synergies and generating reasonable rate of return and recurring income stream to the Group Ability to pursue strategic M&A business opportunities with strong financial position Reduces dependency and reliance on core operating activities Page 4

5 Corporate Structure Business Additions Infrastructure Construction & Civil Engineering Plant and Equipment Rental Precast Concrete Works Investments Koon Construction & Transport Entire Construction Entire Engineering Econ Contech Tesla GPS Alliance Page 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) Page 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 Serangoon Reservoir With over 30 years of experience and accumulated capabilities, the experienced management team has successfully completed various large scale private and public projects Page 8

9 Infrastructure Construction & Civil Engineering - Order Book 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: SGD 30 million to SGD 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 Order Book of SGD million as at 28 March 2011 (excluding the Vietnam Sao Bien port project of SGD 225 million) Page 9

10 Infrastructure Construction & Civil Engineering - Order Book Current domestic projects (Five largest projects in terms of remaining project value) Project Total contract value (SGD million) Infrastructure works at Changi East Tampines Logistics Park infrastructure works Zhenhua Mega Yard Phase Access road to Changi North Industrial Park Remaining contract value (SGD million) Term contract for maintenance of foreshore structures and physical barriers Current overseas project Project Total contract value (SGD million) Sao Bien Port, Vietnam Remaining contract value (SGD million) Page 10

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

12 Infrastructure Construction & Civil Engineering - Industry Outlook (S$ billion) (forecast) Public sector Private sector Total value Source: BCA (Straits Times 13 Jan 2011) 30 SGD billion (forecast) Public sector Private sector Total value Page 12

13 Page 13 Koon Holdings Limited Infrastructure Construction & Civil Engineering - Industry Outlook

14 PLANT AND EQUIPMENT RENTAL

15 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. Page 15

16 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 Barges (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 Page 16

17 PRECASTS CONCRETE WORKS

18 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 for developers 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 for Developers Quality Control Page 18

19 Precast Concrete Works - Introduction Key Facts A total of nine 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 These two companies are Contech Precast Pte Ltd and Econ Precast Pte Ltd which were acquired by the Group in 2010 Acquired 100% of Contech Precast Pte Ltd for SGD 1.78 million in 27 August 2010 Acquired 75% stake in Econ Precast Pte Ltd for SGD 3.75 million on 25 March 2010 Contech Precast is the only qualified manufacturer for precast tunnels used in MRT projects Operates two yards in Singapore and one in Malaysia (Pontian) with more than 18 production lines, spanning a total yard area of 116,245 sqm Page 19

20 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 Page 20

21 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 tripled 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 Page 21

22 Precast Concrete Works Product Range Prestressed Beams Ring Segment Water Tank RC Piles Reinforced Concrete Pipes Insert Pictures Space Adding Item Page 22

23 Precast Concrete Works - Yards Singapore (Kranji Yard) Malaysia Yard (Pontian) Page 23

24 Precast Concrete Works Order Book Order Book Total contract value (SGD million) Precast Concrete Works ± 53.2 (as at 27 April 2011) Page 24

25 Precast Concrete Works - Track Record HDB Tunnel Segment (MRT, BTSS) LRT Page 25

26 Precast Concrete Works - Track Record Lift Shaft High Beam for Flyover Tunnel Page 26

27 Precast Concrete Works - Industry Outlook New flats under BTO 30,000 25, % 25,000 20,000 17,700 Units 15,000 10,000 5, (forecast) Source: HDB (Business Times - May 2011) Page 27

28 Precast Concrete Works - Industry Outlook Pipeline of new private homes Units (forecast) 2012 (forecast) 2013 (forecast) City centre City fringe Suburban Total Source: URA (Straits Times - March 2011) Page 28

29 Page 29 Koon Holdings Limited Precast Concrete Works - Industry Outlook

30 INVESTMENTS

31 Investments - Tesla Key Facts Owns 49% ordinary shares and 19% preference shares in Tesla, for AUD 6.6 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 To begin construction of an AUD 7-8 million (SGD million) 9.9MW diesel power plant in Western Australia that will be completed in the second half of It has also secured sites for the construction of three additional 9.9MW power plants which will be completed in the next two years Opportunity to leverage on Tesla s network to tap into the infrastructure industry in Australia Two-Tier Income Structure upon Operational of the Power Plants Page 31

32 Investments - Tesla Industry Outlook The Western Australia market has seen record breaking power consumption levels over the last 2 years, as the state experienced scorching weather conditions Power consumption hit a high of 3,790MW during the summer, resulting in more than 1,000 households without power 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 Page 32

33 Investments - Tesla 240,000 Maximum Reserve Capacity Price AUD per MW per annum 220, , , , , , , / / / / / /2013 Source: Independent Market Operator of Western Australia Page 33

34 Investments - GPS Alliance Holdings Key Facts Acquires 51% of the issued capital in GPS Alliance Holdings Pte. Ltd. ( GPS Alliance ), for SGD 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 Synergistic addition to the Group s business model; leverage on network of GPS Alliance in the real estate market to explore property development opportunities Provide integrated one-stop services from construction, marketing and property management solutions to developers as a one-stop vendor Page 34

35 FY2010 FINANCIAL HIGHLIGHTS

36 Income Statement SGD Million FY2010 FY2009 Change Comments Revenue (41.8%) Project Completion Timeline: Majority of the major projects were completed in FY2009, hence most of the revenue was recognised in FY2009 instead of FY2010. Revenue Recognition: Revenue is recognised after a project is 20% or more complete. Fewer new projects reached this threshold in FY2010 as compared to FY2009. Gross Profit % Cost containment strategies resulting in reversal of provision. Excluding write-back, gross margin stood at 19% Other Income % Increase in valuation of the option in Tesla; Gain from disposal of 2 crawler cranes; and Additional rental income from precast yard Profit from continuing operations before income tax Profit Attributable to Shareholders % +22.2% Better gross margins Gain from the purchase of the Precast division Dividend income of S$1.5 million from Koon Zinkcon, Gain from the valuation of Tesla's option Page 36

37 Income Statement Revenue Breakdown Division SGD million Notes Infrastructure Construction & Civil Engineering 66.1 Declined by approximately SGD 61.6 million mainly due to changes in project completion and project timing Precast 8.9 Maiden revenue contribution from newly-acquired subsidiaries - Econ Precast Pte Ltd, Econ Precast Sdn Bhd and Contech Precast Pte Ltd Others 7.3 Increase demand of Machinery & Equipment in 1H FY2010 Page 37

38 Dividend Singapore cent Dividend Per Share Special dividend Interim dividend Final dividend 0 FY2009 FY2010 Note: (i) Final dividend of 1 Singapore cent per share proposed in FY2010 is subject to the approval of shareholders at the Annual General Meeting to be convened on 29 April (ii) During FY2010, the Group issued 81,994,000 bonus shares on the basis of one bonus share for every one ordinary share in the capital of the company held by shareholders. Page 38

39 Dividend Estimated Dividend Payout FY FY SGD million Note: (i) Estimated dividend payout is the sum of dividend per share proposed multiplied by the number of issued share outstanding at each respective period (ii) During FY2010, the Group issued 81,994,000 bonus shares on the basis of one bonus share for every one ordinary share in the capital of the company held by shareholders. Page 39

40 Balance Sheet Healthy balance sheet with strong cash position FY2010 FY2009 % Change Current Asset % Non-current assets % Total assets % Current liabilities % Non-current liabilities % Total liabilities % Total equity % Cash and cash equivalents of S$22.5 million as at 31 December 2010 Page 40

41 Cash flow Positive earnings with prudent cash flow management SGD million FY2008 FY2009 FY2010 Profit attributable to shareholder Net cash generated from operating activities Page 41

42 Key Financial Ratios FY2010 FY2009 Gross Profit Margin 20.9% 10.6% Net Profit Margin(i) 17.4% 8.3% Gearing Net cash position Net cash position Debt To Equity Ratio(ii) Return On Equity (ROE) 27.3% 29.1% Earnings Per Share (Singapore cents)(iii) Net Tangible Value Per Ordinary Share (Singapore cents) Note: (i) Net profit margin = Profit attributable to shareholder / Revenue (ii) Debt To Equity Ratio = ((Total Liabilities - Cash And Cash Equivalents)/Shareholders Equity) (iii) Earnings Per Share is derived from from earnings from continuing and discontinued operations divided by the weighted average number of ordinary shares on issue Page 42

43 GOING FORWARD

44 Three Pillars of Growth Infrastructure Construction & Civil Engineering Precast Concrete Works 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 margin-centric business approach Moving up the value-chain 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 Net cash position of SGD 22.5 million 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 Platform for Business Diversity and Growth Page 44

45 END OF PRESENTATION