Koh Brothers Group will hold an extraordinary general meeting (EGM) on Sept 4 for the proposed disposal of land in Johor. The EGM will take place at the Raffles Town Club and shareholders will have till Sept 1 to lodge their proxy form.

 

The proposed sale was announced on Feb 24, when Koh Brothers&rsquo indirect wholly-owned subsidiary, G & W Industries (M) Sdn Bhd, entered into a sale and purchase agreement (SPA) with an unrelated third party on Feb 21.

 

The land will be sold for RM81.5 million or $24.8 million.

 

While no information on the purchaser was released in February, the group now states that the buyer of the land is AirTrunk Malaysia Three Sdn. Bhd., a hyperscale data centre specialist that focuses on building a platform that serves cloud, content and large enterprise customers across Asia Pacific including Japan.

 

Under the terms of the SPA, the land will be sold on an &ldquo as is where is&rdquo basis with vacant possession.

 

The land is freehold and measures some 5.4 hectares or 581,617.14 sq ft.

 

Koh Brothers had purchased the land for RM63.96 million or $19.4 million and is expected to net a gain of $14.9 million upon the proposed disposal.

 

According to an assessment by independent valuer Knight Frank Malaysia Sdn. Bhd., the land has a market value of RM76 million or $23.1 million as at Feb 3.

Catalist-listed Koh Brothers Eco Engineering Limited (Koh Brothers Eco) has reversed into earnings of $3.04 million for the 1HFY2025 ended June 30.

 

Revenue for the reporting period increased 68% y-o-y to $112 million, and gross profit grew over 2,000% to $13.9 million.

 

The group says that this profitability was driven by a strong rebound in the Engineering and Construction segment, which more than doubled its revenue y-o-y to $81.3 million. This was underpinned by higher revenue recognition from new and ongoing projects during the period.

 

Net asset value per share increased to 4.12 cents as at June 30, compared to 3.99 Singapore cents as at Dec 31, 2024.

 

As at June 30, the group&rsquo s order book amounted to $1.1 billion, and cash and bank balances remained at $64.4 million.

 

&ldquo Our Engineering and Construction segment saw project activity step up as we focused on the smooth execution of new and ongoing projects including the design and construction of the proposed Multi-Storey Lorong Halus Bus Depot, piling and ground improvement-related works for the upcoming Toa Payoh integrated development,&rdquo says CEO Paul Shin.

 

&ldquo The recent $999.1 million contract win for Changi Terminal 5&rsquo s intra-terminal tunnels, through an integrated joint venture with Penta Ocean, further strengthens our position, anchoring a robust order book that now exceeds $1 billion,&rdquo he adds.

Koh Brothers Group Limited has reported earnings of $2.6 million for the 1HFY2025 ended June 30, a reversal from the loss reported the same period a year ago.

 

Revenue for 1HFY2025 saw a 34.8% y-o-y growth to $152.2 million mainly due to higher revenue contribution from the Construction and Building Materials division.

 

Gross profit increased to $18.6 million in 1HFY2025 due to improved gross profit margins from the Construction and Building Materials division as well as the Real Estate division.

 

Other income rose 41.5% y-o-y to $1.5 million mainly due to increase in interest income.

 

As at June 30, cash and bank balances increased to $81.6 million. The group&rsquo s net gearing ratio lowered to 0.19 times as at end June.

 

&ldquo Our order book was further strengthened most recently with the award of the $999.1 million contract through an integrated joint venture with Penta Ocean for the construction of intra-terminal tunnels at Changi Airport&rsquo s upcoming Terminal 5. Supported by an order book exceeding $1 billion with visibility extending to 2029, we are committed to delivering sustainable value to our shareholders,&rdquo says Francis Koh, executive chairman and group CEO.

 

The board of directors has declared an interim dividend of 0.1 cent per share for 1HFY2025

Its construction order book exceeds S$1 billion, with visibility to 2029

[SINGAPORE] Construction and property group Koh Brothers is set to usher in a new era of growth, as Singapore embarks on large-scale infrastructure upgrades over the next few years.

 

&ldquo We were there with Singapore in its earlier phases of nation-building &ndash and now we&rsquo re going through nation-building 2.0,&rdquo said group chief executive officer and executive chairman Francis Koh. 

 

He was speaking to The Business Times fresh off the group&rsquo s latest win: a S$999 million contract awarded by Changi Airport for the construction of underground tunnels at the upcoming Terminal 5.

 

The contract was nabbed by a joint venture between Koh Brothers Building and Civil Engineering Contractor &ndash a unit under the group&rsquo s subsidiary Koh Brothers Eco Engineering &ndash and Japanese company Penta-Ocean Construction.

 

With the new project, Koh noted that the group&rsquo s order book now exceeds S$1 billion with visibility to 2029.

 

Things have certainly been rosier for the group.

 

After sustaining one-and-a-half years of pandemic-induced losses, Koh Brothers finally returned to the black with a net profit of S$1.7 million for its latest half-year ended Dec 31, 2024. It had posted a net loss of S$5.9 million the year before. 

 

This was despite revenue sliding 21 per cent to S$125.5 million in H2 2024, from S$159.7 million. Koh attributed the turnaround to reduced construction losses, improved profits from associate company Oiltek International, and the group&rsquo s real estate segment turning profitable. 

 

Shares of Koh Brothers closed at S$0.187 last Friday (Jun 27), putting the company&rsquo s market capitalisation at S$77.1 million. 

 

Growing with Singapore

 

Key growth drivers for the group will come from the construction of Changi Airport Terminal 5 and the expansion of Marina Bay Sands &ndash both of which are likely to be sources of &ldquo very big&rdquo contracts in the near-term, said Koh.

 

As he sees it, the group&rsquo s strong track record in public-sector construction projects puts it in good stead to bag these tenders.

 

Koh Brothers will also continue its standard slate of government projects, including public housing developments, the expansion of MRT networks, and wastewater treatment. 

 

According to the Building and Construction Authority, construction contracts worth up to S$53 billion are expected to be awarded this year. From 2026 to 2029, total construction demand is projected to reach an average of between S$39 billion and S$46 billion each year.

 

Koh Brothers has grown alongside Singapore through the ages, literally. It was, after all, founded by Koh&rsquo s father &ndash Koh Tiat Meng &ndash in 1966, just a year after the Republic gained independence.

 

Since then, the group has been responsible for laying much of the groundwork that has transformed the Republic into a first-world metropolis over the past six decades.

 

Its major projects include the construction of Marina Barrage, Punggol Waterway, water reclamation plants at Changi and Jurong, as well as Downtown Line 1 Bugis Station and its associated tunnels. 

 

Amid booming construction activity, Koh is confident that the group will remain profitable in FY2025 &ndash and perhaps even surpass both top and bottom line numbers from FY2024.

 

Koh is already eyeing future growth opportunities. One key project is the upcoming &ldquo Long Island&rdquo reclamation along Singapore&rsquo s east coast, which will require ground improvement works and also water treatment for the creation of a freshwater reservoir. 

 

He expects tenders to start coming in from 2030 onwards, once feasibility studies conclude. 

 

Diversification within its niche

Some shareholders have raised concerns that the group&rsquo s portfolio is not diversified enough, given the heavy concentration of revenue from construction and building materials. 

 

This segment contributed nearly 95 per cent of total revenue for FY2024, up from 68.8 per cent the year before. The rest came from real estate and leisure, as well as hospitality.

 

But those who take that view lack &ldquo a clear picture&rdquo of the business, said Koh, pointing out that there are many sub-segments. 

 

For instance, the construction division alone consists of three separate business units: infrastructure piling and foundation works building construction as well as water and wastewater treatment. 

 

They were previously lumped together as one, before being carved out during an internal operational streamlining in late 2024.

 

The group has also branched out into bio-refinery and renewable energy projects through Oiltek International, which is a subsidiary of Koh Brothers Eco Engineering. 

 

Koh is ramping up hiring at the building construction unit, as he aims to bid for more private commercial and residential construction contracts down the road. There are plans to increase the unit&rsquo s headcount to 80 by 2027, from eight employees currently.

 

&ldquo We&rsquo ve always been traditionally perceived as being strong in foundation works, but not so much in (the actual construction of) buildings,&rdquo he explained. &ldquo But as a construction company, we should be strong in both areas.&rdquo

 

He also has a bigger ambition: to nurture more &ldquo engineer-preneurs&rdquo &ndash a portmanteau he coined to refer to engineers turned entrepreneurs &ndash and give them the opportunity to lead some of the group&rsquo s subsidiaries one day.

 

This plan is already in motion, with the carving-out of distinct business units within the construction segment.

 

Koh wants to reward the group&rsquo s talent by putting high-potential engineers in charge of these units and empowering them to grow the businesses into subsidiaries. These entities can be potentially spun off for future listings &ldquo when the time is right&rdquo , he said.

 

Oiltek went on a similar trajectory, as an 80-per-cent-held indirect subsidiary of Koh Brothers Eco Engineering. It was spun off to list on the Singapore Exchange&rsquo s Catalist board in 2022, before transferring to the mainboard in April 2025. 

 

Engineering talent will remain crucial to Singapore, as the Republic continues to embark on infrastructural developments, Koh noted. 

 

&ldquo We want to encourage our engineering talent &ndash whether civil engineers, wastewater treatment engineers, or processing engineers &ndash to go on an entrepreneurial path,&rdquo he said.

 

&ldquo The idea is for them to helm our business units, grow them into companies, and expand from there&hellip They can be more independent, raise funds by themselves, or do joint ventures.&rdquo

 

Challenging real estate environment

As the group beefs up its construction and building materials capabilities, its real estate investments have taken a backseat.

 

This is in view of the higher-interest-rate environment, said Koh, noting that government cooling measures have also affected the take-up rates for properties in Singapore. 

 

As part of risk management efforts, he has sought to actively reduce the group&rsquo s bank borrowings. 

 

Koh Brothers&rsquo total bank borrowings and lease liabilities fell to S$145.7 million in FY2024 from S$217.7 million the year before. Its gearing ratio stood at 0.37 as at end-2024, down from 0.54.

 

Still, shareholders have raised concerns over the lack of ongoing property developments by the group of late, following the completion and sale of Van Holland and Hyll on Holland in H1 2024.

 

In light of this, the real estate segment&rsquo s revenue contribution plunged to 4.4 per cent in FY2024, from 30.1 per cent in FY2023. 

 

Koh Brothers still receives recurring income from four investment properties at home and abroad. These are serviced apartment Alocassia, mixed-use development Sun Plaza, First City Complex in Batam, and Nonhyeon I&rsquo Park in Seoul.

 

Given the currently high capital values, some shareholders have suggested the group sell its stake in Sun Plaza &ndash a move Koh is not ruling out. &ldquo If the price is good, we will think about how to unlock shareholder value,&rdquo he said.

 

The group will adopt a prudent approach in seeking out future real estate opportunities, he added, flagging projects in the Johor-Singapore Special Economic Zone as possibilities. 

 

Within the zone, the group has fingers on the upcoming mixed-use development Medini i-Walk. It has formed a joint venture vehicle in Malaysia &ndash of which it owns a 25 per cent equity stake &ndash with partner Dennis Chiu to undertake the project.

 

Koh pointed out the group holds a competitive advantage in the form of a precast concrete facility in Senai that it owns, under the G& W Group of companies &ndash the building materials division of Koh Brothers. This will allow it to directly supply precast concrete components to Medini i-Walk.

 

Meanwhile, the group&rsquo s leisure and hospitality segment is likely to remain status quo for now.

 

It has just one asset under this segment: the 130-room Oxford Hotel on Queen Street. Its operations contributed 1.5 per cent of group revenue for FY2024, roughly on par with FY2023&rsquo s 1.1 per cent. 

 

The group intends to prioritise the growth of its construction and real estate businesses over this, said Koh. 

 

This is because hotels require a higher capital outlay, with returns on investments often taking longer to materialise than those of residential projects.

 

Nonetheless, Koh Brothers is considering asset enhancement initiatives for Oxford Hotel &ndash its poor ratings on hotel booking websites have been flagged by shareholders.

 

&ldquo We take all these opinions very seriously and will see how we can improve,&rdquo Koh said.