Koh Brothers unit makes tunnelling debut with S$520m PUB job

It bags contract with partner Penta-Ocean, lifting parent Koh Brothers Eco's order book to S$878.9m

Singapore

A SUBSIDIARY of Catalist-listed Koh Brothers Eco Engineering marked its first foray into tunnelling by clinching a S$520 million contract from PUB in collaboration with its joint venture partner Penta-Ocean Construction Co Ltd.

The contract won by Koh Brothers Building & Civil Engineering Contractor Pte Ltd (KBCE) and Penta-Ocean is for the Deep Tunnel Sewerage System (DTSS) Phase 2 project.

Both KBCE and Penta-Ocean will be responsible for the design and construction of the tunnels, shafts and other features required under the DTSS Phase 2 project, specifically the section from South Tunnel at Tuas Road and Industrial Tunnel at Pioneer Road to the Tuas Water Reclamation Plant that will span 10.1 km.

Francis Koh, non-executive chairman of Koh Brothers Eco, told The Business Times in a phone interview on Thursday: "With this tunnelling (project), we will gain the tunnelling experience and track record for future projects."

KBCE has mostly focused on construction and hydro-engineering projects. It holds a 35 per cent stake in the joint venture with Penta-Ocean.

The new project, which is scheduled to be completed in June 2023, lifts Koh Brothers Eco's order book to S$878.9 million.

Mr Koh said that about 90 per cent of Koh Brothers Eco's projects are government projects. "There are some bidding projects we do for residential. (These) consist of our own development projects. We also tendered for a HDB project. We are actively tendering but it depends on the price," he said.

The government contracts that Koh Brothers Eco have secured range from S$50 million to about S$300 million while private sector contracts are valued at about S$200-300 million stretched over three to four years.

The first phase of DTSS was completed in 2008. During that year, KBCE had completed works at the Changi Water Reclamation Plant.

On whether it is exploring overseas markets, Mr Koh said that the company is looking at regional countries and will build up tunnelling expertise that will then be exported overseas. He believes that it will have "a competitive edge compared to their local contractors".

Koh Brothers Eco is not ruling out a possibility of moving over to the main board on the Singapore Exchange.

"Now, we are building our size to make it bigger. According to the Building & Construction Authority, the government is going to give out about S$20 billion in infrastructure projects. We are very strong in infrastructure projects so we're poised in a very good position to secure these projects," Mr Koh said.

On Tuesday, KBCE announced that it won a S$225.4 million contract relating to the Circle Line 6 (CCL6). CCL6 is a four km MRT stretch with three stations that will close the loop for the Circle Line by connecting the Harbourfront and Marina Bay stations.

In August, Koh Brothers Eco posted a first-half 2017 net profit of S$2.2 million, up from the previous corresponding period's S$340,000. Revenue for the six months ended June 30, 2017 was S$120.4 million, up from S$20.9 million.

First-half earnings per share stood at 0.3 Singapore cent, up from 0.09 Singapore cent a year ago.

The company attributed the stronger performance mainly to an increase in contribution from the engineering and construction division.

In July 2016, Koh Brothers Eco acquired KBCE to tap "emerging opportunities" in the water and wastewater treatment and hydro-engineering sectors.

Koh Brothers Eco closed trading at S$0.084 on Thursday, up 0.9 cent.