CONSTRUCTION PLAYER Koon has won its first overseas contract half a year after it decided to foray out of Singapore, where project tender has been slowing down.
The contract is worth a good US$160 million (S$226 million) and is for the turnkey design and construction of Sao Bien International Port in Ba Ria – Vung Tau, Vietnam.
”Vietnam holds many opportunities for dredging work at ports as it has many waterfronts,” said Mr Tan Thiam Hee, CEO of Koon during a telephone interview with NextInsight yesterday.
He believes Singapore’s brand name and reputation for reliability, as well as PSA’s good standing as the world’s second largest port operator had a part to play in Koon’s successful tender.
”We are seconding our Singapore consultants who have previously advised PSA,” he said.
When completed, the port is expected to
1) Have a total wharf length of 776 meters,
2) Be able to berth two vessels of up to 30,000 dwt each and another two vessels of up to ten thousand dwt each
3) Have a container handling capacity of 37,464 TEU
Construction starts immediately and will be completed over the next 3.5 years by its 60%-owned subsidiary, Koon-Top Pave Joint Venture.
The contract multiplies Koon's total outstanding order book 5-fold to S$281 million, from about S$55 million as at 31 Dec.
"Contracts from Vietnam tend to be larger and each project takes a longer time to complete due to its relatively large geographic area,” said Mr Tan.
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13 tenders were submitted for this project and Koon was the only Singaporean company.
Having a reputation for being more reliable than local Vietnamese construction firms and being less pricey than Japanese or Korean counterparts is Koon’s competitive niche, said Mr Tan.
The Vietnam port project is expected to start contributing to earnings during the second half of 2010.
Construction revenue contributed S$127.7 million or 90% to Koon’s top line in FY09. Marine logistics contributed 5.3% while rental of machinery and equipment contributed 4.7%.
And with a cash hoard of S$20.8 million as at 31 Dec, the company is looking out for M&A opportunities in pre-cast construction works and property development.
Mr Tan envisages that Koon will be a beneficiary of Singapore’s 2010 national Budget, which provides for M&A allowance of up to 5% of the value of the acquisition (capped at S$5 million for all deals by one company in a year).
Koon is one of Singapore’s largest civil engineering, reclamation and shore protection specialists and was upgraded from Catalist to SGX Mainboard on 4 Feb 2010. Its primary listing is on the ASX.
Related story: KOON: Greener pastures in Vietnam