United Engineers Clinches Contracts Worth $70m
UES Holdings (UESH), a subsidiary of United Engineers has been awarded three environmental contracts worth over $70 million. The bulk of the contracts (two) were awarded by the Public Utilities Board for projects at the Changi Water Reclamation Plant (CWRP). The two contracts are worth a total value of approximately $56.3 million. Johnson Tang, managing director of UESH, singled out the two contracts as further validation of its proven engineering capabilities and reflects PUB’s confidence in its ability to execute technically challenging projects within tight timelines. The other contract that was signed was for a waste-to-energy project at a poultry farm in Singapore. The contract is valued at approximately US$11 million ($14 million). The project is expected to address the environmental problems created by the waste generated at the poultry farm. On a daily basis, the plant will process 80 metric tonnes of poultry manure and 50 tonnes of ‘green waste’. With the inclusion of these projects, United Engineer’s environmental engineering order book will swell to over $94 million.
Significance: The contract wins could boost United Engineer’s future earnings as it looks to diversify its revenue streams. Notably, the firm’s 1Q12 revenue fell largely due to the absence of property sales made in 1Q11.
AIMS-AMP Capital Industrial REIT Secures New Tenants At 27 Penjuru Lane
AIMS-AMP Capital Industrial REIT announced today that it has extended 55 percent of the underlying leases at its 27 Penjuru Lane property to FY16 and FY18. The property’s master lease expires in FY13 and the REIT has been actively looking to reduce its lease expiry risk and achieve positive rental growth at the same time. The newly secured sub-tenancy agreements will generate rental returns which are 7.5 percent higher than the current master lease terms on a weighted average basis. The REIT said that its management is currently in negotiations regarding the renewal of underlying leases for the remaining 45 percent of the 90,506 square metres net lettable area once the master lease expires. Nicholas McGrath, chief executive officer of the REIT said that with the new agreements, the REIT’s underlying lease expiry exposure in FY13 will be reduced significantly to 18 percent.
Significance: Demand for quality warehouse and logistics property in Singapore continues to be strong as reflected by the positive rental reversions the REIT has secured. Consequently, the agreements will help to achieve better returns for unit-holders.
Midas’ PRC JV Wins Rmb860m Contract
Midas Holdings’ joint venture company, Nanjing SR Puzhen Rail Transport (NPRT) has been awarded an Rmb860 million (approximately $171.5 million) metro contract by Dongguan Rail Transit in China. The contract entails the supply of metro train sets to the Dongguan Rapid Railway R2 Line Project. A total of 20 train sets or 120 train cars will be delivered to the project with delivery scheduled from 2013 to 2015. This is NPRT’s second major contract win this year, following an earlier announcement of a Rmb526.9 million contract win for the Suzhou Metro Line 2 Project. Patrick Chew, chief executive officer of Midas said that the contract win together with positive developments in the Chinese railway industry will help to spur the financial growth of the company. Midas currently has a 32.5 percent stake in NPRT.
Significance: The boost to Midas’ China joint venture will probably help to underpin better earnings in future quarters as the company hopes to arrest the declining earnings experienced in 1Q12.