Sharing some key points of the Koon visit last Sat 11 Dec. This was supposed to be a more detailed post...unfortunately I clicked a wrong button and lost what I'd typed
, and now too lazy to re-type everything. So here goes:
1. New growth drivers
- Apart from the traditional reclamation and civil engineering business they specialise in, Koon is branching into the energy market (in Australia) and pre-cast business through acquisitions. With their large cash hoard, company is still on the lookout for more opportunities both locally and overseas.
- Pre-cast business looks promising over next 2 years with HDB's plans to build more public housing. The new Contech and Econ yards, combined with existing yard in Johor, now make Koon the largest pre-cast player in Singapore - at least double or triple in terms of production capacity compared to their competitors. Locally the other 8 to 9 large pre-cast yards are already running at full capacity, whereas Koon's utilization rate only stands at 20% (with their current $34m order book). This suggests that we can possibly expect more contract wins coming up in the next few quarters, since the other companies may not be bidding as aggressively for the HDB and private sector jobs.
2. Business and management undergoing transformation
- The management team was candid and open to sharing on their business and the direction that the company was heading.
- The CEO, Tan Thiam Hee joined Koon in 2008 and brings with him more than 15 years experiences from various industries. Before joining the Company, Thiam Hee was with the Haw Par Corporation Limited as its Group Financial Controller and Company Secretary and held similar positions in ASL Marine Holdings Ltd before that.
- Evidence that the once "kooning" Koon has woken up and is now undergoing an exciting phase of transformation and growth under the capable stewardship of Thiam Hee and his management team, include the synergistic move into the pre-cast industry at the right time, the US$160m foray into the Vietnamese port project, improving profit margins through restructuring and operational cost-cutting mesures.
3. Solid financials and balance sheet
- With their latest $45.7m project win announced on 8 Dec, and more wins likely to come, the operating cash flows is likely to remain strong, which would be potential rerating catalysts to the share price.
- At the existing share price of $0.63, the forward PER is only 2.76 (based on annualised EPS of $0.228 comprising profit of $0.081 from sale of property and marine vessels; and annualising half year profits of $0.0735).
- This is not forgetting the net cash per share at $0.44, as mentioned by yeokiwi-san in previous posting. Hopefully the company would be distributing some special dividends to reward shareholders from this large cash hoard, if they are not able to spot any earnings accretive opportunities!!! This would be a good angpow for the coming CNY!
Homepage
PR Newswire
