4 Stocks This Week (Infrastructure) [15 Feb 2018] – Koh Brothers, Ley Choon, Metech, OKP

Tomorrow (February 19) will see the release of Budget 2018, the eagerly-anticipated outline of the government’s policy objectives and spending priorities. As hinted repeatedly by Singapore’s leaders, there are many important areas in which Singapore needs to dedicated resources to: notably to care for the ageing population and to invest in both human capital and physical infrastructure to cement Singapore’s economic position for years to come.

A recent report by the Building and Construction Authority (BCA) projects demand in the construction sector to reach between $26 billion and $31 billion in 2018, with 60% of the projects coming from the public sector. These projects include major contracts for infrastructure projects like the North-South Corridor, new MRT works, DTSS Phase 2, as well as the remaining packages for Runway 3 by Changi Airport Group.

For our column this week, we will look at four companies on SGX whose primary business is in Infrastructure and might benefit from increased investments in this area.

Read Also: The National Budget: Spending Today vs Investing For The Future? Which Is More Important?

Koh Brothers Group Limited (SGX: K75)

Established in 1966, Koh Brothers Group Limited and its constituent companies engage in the construction and building materials, real estate, as well as leisure and hospitality businesses. They have operations in Singapore, China, Malaysia, and the rest of Asia.

The company engages in the construction activities for building and civil engineering, and water and wastewater treatment, as well as hydro-engineering, and bio-refinery and bio-energy engineering projects.

They have expertise in areas like sustainable building, water treatment, roadworks, drainage, condominium and private homes development, building schools and tunnelling. Notable past projects in their long track record include Bugis MRT, Bukit Timah Canal, Changi and Jurong water reclamation plants, Punggol Waterway and the Marina Barrage.

The group also owns and operates the 135-room Oxford Hotel in Singapore’s Central Business District; Alocassia Apartments, a 45-unit service apartment in Bukit Timah Road; and Asian Hotel Saigon, a 47-room 3-star hotel located in Ho Chi Minh, Vietnam.

The group’s order book currently stands at $762.7 million, which has been bolstered by recent contract wins including a contract relating to Circle Line 6, in which the group will carry out all civil, structural, architectural, electrical & mechanical and system works relating to the construction of cut-and-cover tunnels and other structures from the east of the planned Prince Edward Station to the existing Marina Bay Station.

Their stock closed this week at $0.325.

Ley Choon Group Holdings Limited (SGX: Q0X)

Ley Choon Group Holdings Limited is a one-stop underground utilities infrastructure and road works service provider in Singapore, Brunei, China, and Sri Lanka. Headquartered in Singapore, they have a staff strength of over 1,000.

They construct and maintain underground utilities infrastructure like water pipes, NEWater pipes, high-pressure gas pipes, high-voltage power cables, and fibre optic cables. They also do construction and maintenance of roads, airfield taxiways, and aprons. In 2017, their projects included the resurfacing of taxiways at Changi Airport.

The company manufactures asphalt premix and recycling of construction waste under their construction materials segment. The company also offers building cleaning and maintenance services, as well as sell dry mortar concrete, concrete blocks, ready mix concrete, cement bricks, and sands. It also provides mixed construction and civil engineering services.

As BCA L6 registered contractor (the highest grade), they can tender for Singapore public sector contracts of unlimited value in the categories of cable/pipe-laying and road reinstatement, pipes, and other basic construction materials. They are also an A1 registered contractor in the category of civil engineering (CW02).

Their customers include government bodies such as the Public Utilities Board, Land Transport Authority, Housing and Development Board, Urban Redevelopment Authority, BCA, and Jurong Town Corporation. Private sector customers include SingTel, Changi Airport Group and PowerGas.

From December 2017 to January 2018, the group announced three secured contracts worth about $36 million for the replacement of water mains for network renewal and for supplying and laying of NEWater mains. Together with earlier contracts secured, the group’s unfulfilled order books based on secured contracts stood at approximately $155 million.

Their stock closed at $0.037.

Metech International Limited (SGX: QG1)

Metech International Limited an investment holding company that provides recycling and processing services for the electronics industry in the United States of America, Singapore, China, and Malaysia.

The company offers recycling solutions for electronic, electrical, and equipment waste; and recovers precious metals, such as gold, silver, palladium, and platinum. They also provide repair and reuse services for computer hardware, data processing equipment, and computer peripherals. Their customers include Original Equipment Manufacturers (OEMs), multi-national corporations (MNCs), service providers, and government agencies.

With the Singapore government’s plan to adopt the Extended Producer Responsibility approach to improve the recycling rates of E-Waste in Singapore, new business opportunities might open up for Metech. This approach places responsibility on electronic goods producers to make sure their products are properly recycled or disposed of in Singapore.

Metech closed trading this week at $0.003

OKP Holdings Limited (SGX: 5CF)

OKP Holdings Limited and its subsidiary corporations are a leading transport infrastructure and civil engineering group in Singapore. They tender for both public and private civil engineering and infrastructure construction projects as well as maintenance contracts.

Their construction segment specialises in the construction of airport runways and taxiways, expressways, fly overs, vehicular bridges, urban and arterial roads, airport infrastructure and oil and gas-related infrastructure for petrochemical plants and oil storage terminals. In addition, their maintenance segment provides re-construction work for roads, road reserves, pavements, footpaths and kerbs, guardrails, railings, drains, and signboards, as well as bus bays and shelters.

Over the years, OKP has also expanded their core business to include property development and investment. The company offers technical management and consultancy, rental and investment holding, and transport and logistics services.

OKP reported that for financial year 2017, group revenue rose by 5.6% to $117.3 million due to higher contribution from the maintenance segment. This was attributed to a higher percentage of revenue recognised from a number of existing and newly-awarded maintenance projects which progressed to a more active phase.

Their stock closed this week at $0.34.

Investing In Companies On The SGX

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Read Also: 5 Criteria To Better Evaluate The Stock You Want To Invest In

4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.

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