Most of Koon's projects are self-funding, said CEO Tan Thiam Hee yesterday. Photo by Leong Chan Teik
BRIMING WITH satisfaction following its achievement of a net profit of S$10.7 million for FY09, which is a whopping 5 times that of FY08, Koon Holdings is crossing its fingers that it might secure its first major overseas project – in Vietnam.

After recognising $135.3 million of revenue in FY09, the civil engineering, reclamation and shore protection specialist has an outstanding order book of S$55.5 million.

It has tendered for a number of projects in Singapore, as well as two sizeable projects worth over S$135 million in Vietnam.

The management believes there are significant opportunities for infrastructure projects in Vietnam, where construction output grew 11.4% year-on-year during 4Q09. 

The rapidly industrializing nation has a population of over 86 million and is the 13th most populous country in the world.

”The market in Singapore is limited and Vietnam is not small,” said Koon’s CEO Tan Thiam Hee, at its results briefing for analysts and fund managers yesterday.

Project Tender Amount Expected Award Date

Vietnam River Port

> S$85 million

Tender closed but not awarded

Vietnam Highway

> S$50 million

Tender still open

Source: Koon


Boosted by increased construction demand in Singapore, Koon’s FY09 revenues rose 10.6% to S$135.3 million. 

Group revenue growth was mainly due to the substantial completion of several larger construction projects.

Construction revenue, which contributes the lion’s share to top line, grew 14% to S$127.7 million in FY09.

The strong construction demand spilled over to Koon’s industrial vehicle rental business, which leases out cranes, excavators, trucks and other construction vehicles. 

Revenues arising from lease of industrial vehicles and other equipment grew 59.4% to S$6.7 million, offsetting the decline in turnover from Koon’s marine logistics division, which was impacted by an industry wide slowdown in demand for marine transportation services.

Koon has a fleet of 13 barges and 6 tugboats, which it makes available for charter.  FY09 revenue from marine logistics declined 24.0% to S$7.6 million.

By streamlining and rationalizing operations, the group decreased its costs and sharply improved gross profit margins from 3.1% in FY08 to 12.5% in FY09.

The Group’s net cash position near doubled to S$20.6 million as at 31 December 2009.   A further paring down of finance leases during the period also resulted in improvements in gross gearing, which fell from 16.6% to 9.7% in FY2009.  Net gearing remains at zero.

Singapore’s construction demand for 2010 is projected to reach between S$21 billion and S$27 billion, according to a Building and Construction Authority announcement made on 13 Jan. This is a continuation of a sustained workload from last year’s $21 billion worth of contracts awarded.

The company announced a final dividend of one cent per share and a special dividend of half a cent per share.   Including its interim dividend of one cent per share, the dividend yield works out to 5.3% based on yesterday’s closing price of 47 cents.

It is likely to generate more investor interest with its impending upgrade to the Main board of SGX

Related story:
KOON: Up 18% on profit guidance & likely mainboard upgrade

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