Koh Brothers Eco Engineering Limited, a SGX Catalist-listed sustainable engineering solutions provider, recently reported a higher net profit of 15 per cent attributable to shareholders of S$7 million (US$5.29 million) for the financial year ended 31 December 2017 (FY2017) on revenue of S$298.4 million (US$225.52 million), a 48 per cent growth year-on-year.
The stronger performance was largely attributable to an increase in contribution from the Engineering and Construction Division. During the financial year under review, the division posted revenue of S$227 million (US$209.35 million) against S$174.6 million (US$131.96 million) in the financial year ended 31 December 2016 (FY2016). The segment’s profit also rose from S$3.3 million (US$2.49 million) in FY2016 to S$5.8 million (US$4.38 million).
“This set of results reaffirms the Group’s strategic move to capitalise on the synergies between out Construction and Civil Engineering business and Water and Wastewater Treatment business to sharpen our position to secure opportunities and drive growth amid the challenging operating environment,” Francis Koh, Chairman of Koh Brothers Eco, said.
In July 2016, Koh Brothers Eco acquired building and civil engineering construction specialist, Koh Brothers Building & Civil Engineering Contractor Pte Ltd to widen its opportunities in the water and wastewater treatment sector, as well as the hydro-engineering and civil engineering arena.
As of 31 December 2017, the Group’s balance sheet remains robust with cash and bank balances of S$24.9 million (US$18.82 million) along with a net cash position.
The Group’s earnings per share were also at S$0.80 (US$0.60) in FY 2017, and net asset value per share as at 31 December 2017 rose from S$5.27 (US$3.98) to S$5.94 (US$4.49).
Moreover, to thank shareholders for their support, the Group has proposed to increase a final cash dividend from S$0.06 (US$0.05) per share in the previous year to S$0.10 (US$0.08).
Outlook and future strategies
The Group’s order book remains strong at S$762.7 million (US$576.42 million), which was lifted by recent contract wins, including a contract related to the Deep Tunnel Sewerage System (DTSS) Phase 2 project secured by its joint venture, POKB JV, of which Koh Brothers Eco own 35 per cent. Set up together with the Group’s joint partner, Penta-Ocean Construction Co. Ltd, POKB JV will be responsible for the design and construction of the tunnels, shafts, as well as other features required under Contract T-08 of the DTSS Phase 2 project.
In September 2016, the Group also won a contract related to Circle Line 6, in which the Group will carry out all civil, structural, architectural, electrical and mechanical, as well as system works related to the construction of cut-and-cover tunnels and other structures from the easy of the planned Prince Edward Station to the existing Marina Bay Station.
On the construction sector front, the Building and Construction Authority (BCA) projects demand to reach between S$26 billion (US$19.65 billion) and S$31 billion (US$23.43 billion) this year, with 60 per cent of the projects to be derived from the public sector. These projects include additional major contracts for infrastructure projects like the North-South Corridor, new MRT works, and DTSS Phase 2 as well as the remaining package for Runway 3 by Changi Airport Group.
On the outlook of the water industry, PUB, Singapore’s National Water Agency, plans to ensure the country’s water supply is more resilient against weather uncertainties as well as meet future demand by progressively increasingly NEWater and desalination capacity to meet 85 per cent of Singapore’s water needs by 2060. While the third desalination plant in Tuas is expected to commence operations soon, the fourth and fifth desalination plants in Marina East and Jurong Island are expected to be operational by 2020. PUB has plans for a sixth desalination plant which will be built in tandem with the Tuas Water Reclamation Plant under Phase 2 of the DTSS project.
Separately, the Group’s majority-owned subsidiary, Oiltek Sdn Bhd, held under the bio-refinery and bio-energy division, remains positive about the long term prospects of the commodities industry despite the current challenges in the sector. Moving forward, Oiltek will continue to develop and innovate new proprietary technology in the oil refining process that will improve its competitive edge to secure growth opportunities.
“We are heartened by the strong support from our shareholders for the proposed rights cum warrants issue exercise which was completed in November last year. Your support reflects the confidence you have in the company and the management’s ability to steer the Group towards its next growth phase,” CEO of Koh Brothers Eco, Paul Shin, said. “Looking ahead, we remain optimistic on our outlook given BCA’s higher projected construction demand for the current year. We will continue to leverage on our expanded capabilities and strengthened financial position to seize growth opportunities, including new projects to add to our order book.”