2014 has been a year of stellar growth for King Wan Corporation Limited (King Wan or the Group) (庆源企业). Despite the tumultuous year before, which was fraught with economic uncertainties and impacts from the cooling measures on the Singapore property market, the Group has scaled up and expanded both in strength and in numbers.
Anchored on our strategy of building multi-country, multi-industry portfolio, we have not only strengthened our core Mechanical & Electrical (M&E) business, but also successfully ventured into a brand new business segment in workers’ dormitory operations to augment the business portfolio for the Group.
We are pleased to announce a robust 44% growth in revenue to S$95.4 million for the full financial year ended 31 March 2014 (FY2014) as compared to S$66.3 million recorded in the last financial year (FY2013). The surge in revenue was due to a significant increase in the total revenue generated from M&E contracts.
Over the year, the Group has successfully completed a wide spectrum of M&E projects from both the private and public sectors. Among some of our noteworthy key projects completed are the Singapore Sports Hub; commercial projects such as The Carlton Hotel; and private condominiums such as the L’Viv Condominium, The Hamilton, Jean Nouvel Residences and Goodwood Residence.
The investments in our investment portfolio has also successfully raked in steady recurring revenues streams. Our 30 per cent investment in a ‘Supramax’ Bulk Carrier, “Hai Jin”, has reaped its first positive contribution to King Wan’s bottomline since it commenced its maiden time charter contract in March 2013.
The Property Development segment remains challenging in view of the slowdown in the property sector in both Singapore and China. The Group is well invested into the growth cycle in these markets and will work towards realizing the investments progressively.
King Wan’s financial position as at 31 March 2014 remained strong, backed by S$86.4 million of net assets. Net asset value per share for the Group stood at 24.75 cents per share as at 31 March 2014, an increase from 24.31 cents per share as at 31 March 2013.
The Group has approximately S$153 million worth of the M&E engineering contracts on hand, with completion dates ranging from years 2014 to 2017. The Group expects the M&E business
segment to contribute positively to the Group’s results in the next 12 months.
Riding on the wave of new growth opportunities, the Group has successfully ventured into the new workers’ dormitory business, by means of a 19% stake in a consortium which will be involved in the design, development and operations of one of the largest workers’ dormitory projects in Singapore. The consortium has successfully secured a land tender awarded by Jurong Town Corporation that will be developed into a 9,200-bed workers’ dormitory.
In line with the government’s efforts to improve the welfare of foreign workers, the consortium is committed to provide a well-managed purpose built worker dormitory with comprehensive facilities that will meet the needs of the dormitory residents.
Together with our experienced business partners, we are confident that we will be able to make a fruitful foray into this growth sector and bring about higher value for our shareholders.
I am also pleased to announce that our long awaited investment in Kaset Thai International Sugar Corporation Public Company Limited (KTIS) has also bore fruit when KTIS received the approval from the Securities and Exchange Commission in Thailand (“SEC”) for listing on 18 April 2014 and was successfully listed on the Stock Exchange of Thailand (SET) on 28 April 2014.
Based on the Sales & Purchase Agreement (“SPA”) signed in 2012, the Group was allotted a total of 116.3 million shares. This is approximately 3.01% of KTIS issued common shares after the IPO and is worth approximately S$45.4 million. The net profits accruing from the completion of the SPA is approximately S$24 million.
At King Wan, we are not only committed to deliver strong business performance and shareholders’ value, but also uphold good practices for sustainable business conduct as well as social success and development.
In 2014, we have made a bold step to embrace corporate social responsibility within King Wan. The Group is committed to contribute to the welfare of society and encourage the spirit of volunteerism among the employees. In conjunction with the Holland-Bukit Timah GRC, we hosted a Corporate Social Responsibility (CSR) programme on 8 December 2013 in support of 20 beneficiaries from the lower income households residing in Hong Kah North division (Bukit Batok area). Held at Universal Studios Singapore, volunteers from King Wan actively supported this project. With the overwhelming success, the Group will continue and expand our support for the community outreach programmes in the year ahead.
Based on the growth forecast by the Ministry of Trade and Industry on 20 May 2014, Singapore economy grew by 4.9 per cent on a year-on-year basis in the first quarter, similar to the rate of growth achieved in the previous quarter. On a quarter-on-quarter seasonally-adjusted annualised basis, the economy grew by 2.3 per cent, moderating from the 6.9 per cent growth in the preceding quarter.
The construction sector expanded by 6.7 per cent on a year-on-year basis, slower than the 7.3 per cent growth in the preceding quarter. The moderation in growth was largely due to weakness in private sector construction activities. On a quarter-on-quarter seasonally-adjusted annualised basis, the sector grew by 0.6 per cent, sharply lower than the 10.6 per cent growth in the last quarter.
The industry outlook remains challenging in the next 12 months with increasing competition and anticipated increase in labour cost on foreign workers. The Group will endeavour to monitor and manage the labour supply as effectively as possible to keep its projects on time and within budget.
The Group will continue to focus on its core business by leveraging its strong track record in M&E engineering to secure more projects, as well as enhancing cost effectiveness and efficiency optimisation in the management of ongoing projects.
With sound financial backing, King Wan will be in a strong position to explore more strategic investments that will add value to shareholders. We will continue to deepen our reach in the markets we are operating in and explore opportunities in other geographical markets and business segments.
The Board of Directors is pleased to recommend a one-tier tax-exempt final dividend of 1.5 Singapore cents per share to be approved by shareholders at the forthcoming annual general meeting to be held on 29 July 2014. Upon approval, the dividend will be payable on 15 August 2014.
Together with the interim dividend of 0.5 Singapore cent paid out on 12 December 2013, the total dividend paid per share for FY2014 will be 2.0 Singapore cents. This is the company’s way of showing appreciation to all its shareholders for their unrelenting support in the past one year.
On behalf of the Board, I would like to express my deepest appreciation to all stakeholders who have been instrumental in King Wan’s success over the past years– customers, business associates, management team, staff and shareholders.
I am grateful for the loyal support of our customers and business associates through all these years. Our strategic partnership will ensure King Wan can nurture greater sustainability for our business operations as well as the communities we operate in.
I look forward to the unwavering commitment of our management team and staff who are pivotal to our success. We will grow from strength to strength in building our market leadership in our core businesses and nurture new growth opportunities in Singapore and beyond.
Last but not least, I like to thank the Board of Directors for their invaluable guidance. Together, we can drive innovation to scale new heights for King Wan and all our stakeholders.