Group Strategy

Our mission is to deliver quality products and services in structural steelworks for the construction industry on a timely and reliable basis to meet customers, safety and regulatory requirements. Our corporate objective is to achieve sustainable growth in our business and financial performance so as to create long-term shareholder’s value.

We intend to achieve this by implementing the following corporate strategies.

Expand and strengthen our market position in the structural steelwork industry in Singapore, through the expansion of our production capacity and workforce

Strategies

We have a proven track record in several noteworthy projects, where in 2015, we secured an industrial building project to supply, fabricate, deliver to site, install and test the structural steelworks for technological plants of a multinational corporation in Singapore with a contract value of approximately S$25.8 million. Moreover, our utilisation rates were approximately 94.3% and 82.4% for the two years ended 31 December 2016 respectively. As such, we intend to expand our fabrication capacity to secure more jobs as well as to strengthen our market position in the structural steelwork industry in Singapore. We intend to set up another fabrication facility of approximately 60,000 square feet with an expected annual production capacity of approximately 4,600 tonnes. Moreover, we intend for the new fabrication facility to be renovated to customise to our production flow and to explore ways to reduce its environmental impact, such as through the installation of solar panels and systems that reduce energy consumption. We would source for a facility located in the same (northern) region of Singapore as our current premise. As at the Latest Practicable Date, we are still in the process of identifying suitable sites for our proposed fabrication facility and are unable to determine a commencement and completion date for the construction of such facility.

For our expansion, we will make further capital investments in steel fabrication machineries such as welding machines, drilling machines, cutting machines and rolling machine and lifting/transport machineries. We will also seek to expand our workforce in terms of staff strength in the project department, contract department, quality control, safety and skilled workers.

We estimate that the total cost of investments for our new fabrication facility, namely cost of property and its renovation and machineries will be approximately S$13.6 million.

We further work out our breakeven period and investment payback period based on the below assumptions:

We will be able to obtain debt financing of approximately S$6.0 million, which is estimated based on the purchase price of the new fabrication facility of approximately S$9.0 million, out of which, approximately S$[REDACTED] million will be funded by the net proceeds;
Net proceeds are available at or around July 2017;
As the highest cost of investments for our new fabrication facility is the purchase price of the additional steel fabrication facility which we estimate to be approximately S$9.0 million, and that this sum is to planned to be paid by the end of the year ending 31 December 2017, the total costs of the aforesaid investment of S$13.6 million is assumed to be paid on 1 January 2018 for the purpose of this calculation;
We assume that the remaining lease term for the new fabrication facility to the approximately 25 years.
We assume that it would require nine months from the time the costs of investments is made to have the new fabrication facility operational. This is based on our estimation of the time required to renovate the facility to suit our needs, and time to have our machinery calibrated and tested before being put into operation;
We assume the annual revenue to be generated from this fabrication facility to be the same as the revenue for the year ended 31 December 2016. As it is premature and not practicable to secure projects now for the planned new fabrication facility, we assume that the revenue generated is that of the most recent audited financial year on the basis that the annual production capacity is expected to be similar to our current production capacity;
As we intend for the new fabrication facility to be used mainly for production purpose, instead of as general office for non-production related function, we have used the gross profit margin for the year ended 31 December 2016 as a basis of calculating the return of the aforesaid investment;
We assume that revenue and gross profits are generated evenly throughout the year, starting from the time our new fabrication facility is operational;
No increase in revenue nor gross profit is assumed despite continued investments into machineries and workforce for the year ending 31 December 2018; and
No discount factor is assumed for the returns from the investment due to the relatively short time period.

Based on the above assumptions, the break even period and investment payback period for the new fabrication facility is approximately 10 months, and 35 months respectively.