Volatile World

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Founded in 1969, Hock Lian Seng (HLS) is a civil engineering and infrastructure construction company for both public and private projects. Clients include Land Transport Authority, Housing Development Board, Port of Singapore Authority, Public Utility Board and Civil Aviation Authority of Singapore.

Property development projects include Ark@kband The Skywood.

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Ongoing projects are:

• Maxwell Station for Thomson-East Coast MRT Line

• Changi Airport three-runway operations

• Shine@TuasSouth

• Ark@Gambas

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Joint venture projects are:

• The Antares - a 265 units development at Mattar Road

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Recent contracts win are Cross Island MRT Line - phase 1 design & construction of station and tunnels for:

• Aviation Park

• Serangoon North

Civil Engineering order book is about $1.0B.

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Financial

On a broader horizon, the firm's gross & operating margin had been weakening since peak in 2013. Reflecting competitive pressure to win projects on ever lower margin. This is in part also due to Covid-19 pandemic from 2020~2021 resulting in higher labour, material and compliance cost.

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Property development business top & bottom line tend to be volatile. Earning from property investment was not significant.

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FY-2021 revenue was $169M. Core Civil Engineering have recovered on strong order book. Margin remain weak at 9.8%. Income from Shine@TuasSouth and The Antares enabled HLS to close the year with $25M profit vs $4.2M in FY20.

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Balance sheet is healthy. The company has cleared all debt as of FY19. Current ratio was 2.2 in FY21.

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Opinion

In the medium term, Shine@TuasSouth should support earning as Tuas Mega Port Terminal gradually opens in phases. Margin for new Cross Island MRT Line Aviation Park and Serangoon North projects is unknown.