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SET “Sawadekaps” KTIS; King Wan Turns Bullish
An April listing of associate, Kaset Thai could drive valuations of King Wan’s stake up substantially. Special dividends could also be in the pipeline.
Order win momentum appears strong even as King Wan reports a healthy order book of S$166 million
King Wan is deemed as a stable and dominant mechanical and electrical (M&E) engineering company in Singapore.
The King Of M&E
King Wan established its M&E foothold in Singapore more than 30 years ago. The company currently claims to be one of the leaders of M&E engineering in the building and construction industry.
The company has, under its belt, completed various projects for both public and private residential developments.
King Wan also engages in property development, having various projects in Singapore, China and Thailand. Other business segments include manufacturing, services, and vessel ownership and chartering.
Below is a pie chart of contributions from King Wan’s segments to its FY13 bottom line.
Source: King Wan FY13 Annual Report
The Thai Link
On 25 April 2012, King Wan sold its stakes in Environment Pulp and Paper Company (EPPCO) and Ekarat Pattana (EPC) to Kaset Thai Industry Sugar (KTIS). The price tag for this sale amounted to about S$50.2 million of which 5 percent was received in cash.
The remaining amount (about S$47.7 million) would be satisfied through KTIS shares when it is listed on the Stock Exchange of Thailand (SET).
Recently, sources from Thailand (an article from the Bangkok Post on Friday, 4 April 2014), stated that KTIS will be listing on 21-23 April 2014. This basically means that King Wan will finally be able to realise the bulk of the value of its 2012 stake sale to KTIS.
Although the IPO price has not been confirmed, Lee Yue Jer from OSK DMG pointed out the following in a report released this (8/4/14) morning:
When contacted, King Wan’s media consultants said that the company is very happy with the new development. Based on talks so far, King Wan is also satisfied with the pricing direction that the KTIS IPO is heading towards.
Healthy Order Book And Contract Wins Add Further Bullish Signs
Recently, King Wan announced that it had secured six new M&E projects in Singapore. The six projects added a total of S$41.8 million to King Wan’s already burgeoning order book.
King Wan recently won a plumbing and sanitary installation project for The Crest condominium
As at 11 February 2014, King Wan boasts an order book of S$166 million. This large order book has provided investors with some idea of how King Wan’s revenue growth will be like in the next two years.
In fact, contract wins are anticipated to grow further as more Housing Development Board (HDB) contracts are awarded.
King Wan’s Financial Report Card
Aside from the order book and contract wins, King Wan also has a relatively stable financial report card. Below is a snapshot of selected financial figures and ratios.
Source: Reuters
Source: Company financial statements
The upcoming FY14 results which is due to be released soon are also expected to remain largely stable and in line with its 9M14 financial report. The main question would be then, will there be a special dividend?
And A Bull It Shall Be
With the IPO price of KTIS set to be the focus of the market watchers, be ready for some volatility. Remember, it does not matter which way the IPO is priced, King Wan will still stand to win. It will only be a matter of payout in the form of special dividends in the short term or delayed gratification from a substantial stake in KTIS.
Don’t you just love win-win situations.
*I do not hold any positions in King Wan at the time of writing.*
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