KOON HOLDINGS

Koon shares are up + 3 cents now after it announced a 100% jump in its pre-cast orderbook.

This came about after it won contracts to supply precast components for the construction of new HDB flats and a private industrial development project.

Aggregate contract value of S$53.73 million

Order book of the Precast division currently stands at approximately S$103.40 million

Diversify seems to be the order from the top at Koon. It got into pre-cast business only 2 years ago and also power generation in Australia. Then got into real estate agency -- which now has added a new segment --- home furnishings, design consultancy and installation services.

Not every investor likes this diversification.

THE Housing Board's plan to add 25,000 Build-to-Order flats this year will require the services of some 30,000 construction workers who will mostly be foreigners.
But bringing them in and housing them is becoming increasingly difficult, with most Singaporeans not in favour of having foreign worker dormitories near their homes, said National Development Minister Khaw Boon Wan yesterday.
This is why the construction industry must think of new ways to reduce its reliance on manual labour, he added.
And one solution is to build the flats much in the same way that Lego bricks are put together.
Already, 70 per cent of HDB building components, such as walls, floors, doors and toilets, are fabricated off-site and then transported to the construction site for assembly.
But Singapore can do better than that, said the minister in a blog post.
The prefabrication plants themselves need to become highly computerised and automated.
They should also be housed in multi-storey facilities to take up less land, wrote Mr Khaw, who recently visited two prefabrication plants.
Mr Khaw highlighted the example of Tiong Seng Contractors which is setting up Singapore's first Integrated Construction and Precast Hub (ICPH) in Tuas.
ICPH will incorporate computerisation and semi-automated precasting, resulting in not only a reduction of manpower needs by up to 70 per cent, but also an increase in production.
In an existing plant, 150 workers can produce 60,000 cubic m of precast components annually. But in a new ICPH, only 50 workers are needed for an annual production capacity of 100,000 cubic m.
There are currently 18 precasters supplying components to HDB.
And while Mr Khaw acknowledged the key roles foreign construction workers play in construction, he added that relying more on precast components will eliminate most of the labour intensive, dirty and cumbersome wet work on site.
This will make sites cleaner, tidier, less dusty and less noisy.
He urged other contractors to implement the Building and Construction Authority's (BCA) Construction Productivity Roadmap, which aims to help the industry raise its productivity levels.
The BCA has also formulated a masterplan for the development of ICPHs.
It is giving Tiong Seng funding support through its $250 million Construction Productivity and Capability Fund and making more land available for such ICPHs in its masterplan.
In a response to queries from The Straits Times, BCA said it would be inviting proposals from the industry to develop more automated precast facilities to achieve better land use and higher productivity.
Those in the prefabrication industry applaud the move.
Said Mr Pek Lian Guan, managing director of Tiong Seng Contractors: 'The costs of wages, overheads and land are rising and construction methods with higher productivity will act as a buffer for these changes.'
He added that Tiong Seng currently sets aside 10 per cent of its output for projects outside its own. Tiong Seng Contractors is a subsidiary of construction group and property developer Tiong Seng Holdings.
But with the new plant, estimated to cost between $26 million and $30 million, it will be able to increase supply to clients, such as HDB, to 50 per cent.
The plant, which is slated to be ready by the middle of this year, will have three storeys and 19,000 sq m in total floor area.
Another company that is planning to jump on the ICPH bandwagon is Koon Holdings, of which Econ Precast and Contech Precast are subsidiaries.
Mr Tan Thiam Hee, chief executive of Koon Holdings, said that it plans to have an ICPH and that the BCA has earmarked potential sites for it.
He explained: 'It is a fact that automation is more efficient and productive. It will probably increase our productivity by about 60 to 70 per cent but cut our manpower down to one-third its present size.'

Koon also long time no talkk about it. Just announced S$53.5 million contract awarded by Alstom Power Singapore Pte Ltd, who is the main contractor, for the construction of Sea Water Intake Facilities for Sembcorp Cogen.

This doubles the construction orderbook. Anyone has an analysis of this one, which I initially thought was a good play on the HDB construction boom. Seems like it has diversified into many other things.

With so many property projects being launched and HDB too , will market interest spill over to the players who are downstream?

Koon -- pre-cast and construction.

Hafary -- tiles, sanitary ware, etc

It may sound like rojak, but the diversity of the new businesses is making Koon more attractive to investors who don't particularly like the low-margin construction biz.
The new businesses are synergistic and I believe they have better profit margins.
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[Reck 29-12-2011]:

Diversify seems to be the order from the top at Koon. It got into pre-cast business only 2 years ago and also power generation in Australia. Then got into real estate agency -- which now has added a new segment --- home furnishings, design consultancy and installation services.

Not every investor likes this diversification.