KORI Holdings said on Monday that its subsidiary Kori Construction snagged two contracts in two projects, amounting to S$52.3 million between May and June this year.

 

One project is awarded by Samsung C& T Corporation to supply and install temporary steel works for the design and construction of a tunnel between Novena Rise and Toa Payoh Rise for the North-South Corridor.

 

The other is awarded by the Hwa Seng-Chye Joo-Ho Lee joint venture to supply, install, dismantle and buy back steel struts and walers for the design and construction of a tunnel between Pemimpin Place and Sin Ming Avenue, also for the North-South Corridor.

 

Said Hooi Yu Koh, executive chairman and chief executive officer of Kori Holdings: " We are pleased to have been awarded these contracts for the North-South Corridor. This not only affirms our long-standing proven track record established over the years, but also signifies the trust and confidence that our customers and partners have in us."

 

Kori was awarded six contracts between September 2020 and January 2021. With the addition of these two contracts, it has clinched a total of S$133.5 million in contracts since last September.

The Catalist-listed specialist builder is engaging in R& D efforts to improve long-term productivity.

 

LABOUR crunches and spiking steel prices are among the challenges facing specialist builder Kori Holdings this year.

 

But its chief executive Hooi Yu Koh believes that the 39-year-old company can power through with a fresh crop of contracts. Rather than diversify, as some of his peers have done, he is betting on R& D efforts to improve productivity.

 

He remains confident that Kori, which listed on the Catalist in 2012, can continue to retain an edge in public infrastructure projects. More of such projects can be expected following initiatives announced in this year' s Budget.

 

Speaking to The Business Times at his Sims Drive office, Mr Hooi said the Covid-19 pandemic has had a significant impact on the supply of foreign labour.

 

" When the ' Circuit Breaker' kicked in and the entire industry went into a standstill, followed by the dormitories having infections, that hit us pretty badly. We ceased operations and our income was down to a minimal level. It was the Jobs Support Scheme that allowed us to (get) through," he said, in reference to the government' s wage subsidy measures.

 

Even after the Circuit Breaker was lifted on June 1 last year, Kori could not restart work proper because of the " rampant" Covid-19 infections in foreign worker dormitories.

 

" Without workers, we cannot perform. That period was like (another) Circuit Breaker, where the expectation was to start but we couldn' t. Those two months, June and July, were a period where our employees were worried about how long this would take."

 

Kori' s financial performance for H1 FY2020 reflects some of the impact, although the full extent is yet to be seen. For the half-year ended June, the firm posted S$83,000 in net profit, down 22 per cent from a year ago. Its revenue fell 30 per cent year-on-year to S$6.1 million.

 

Mr Hooi said the labour crunch has eased since August, and Kori gradually resumed works while clinching new contracts.

 

As at Jan 4, it has bagged three projects worth S$81.2 million: two involving the North South Corridor tunnel and the other for the new Mandai eco-resort.

 

Steel spike

 

Even as labour conditions have normalised, however, Kori now has to deal with a spike in steel prices due to resurgent demand for the material as construction works resume globally. Kori' s key segments are steel works and tunnelling.

 

Mr Hooi estimates that the price for steel materials have increased by between 10 and 20 per cent in the past two months.

 

" From January to November 2020, the prices were pretty stagnant because there was no demand. It picked up some time in late November, and in this period of about two months it is really shooting up," he said.

 

He believes the price will gradually stabilise, especially as more steel mills resume operations at higher capacity and export more of the material. As a firm that also leases out steel beams, Kori is also partly protected, he added.

 

" The good thing for us is that when we buy steel materials, we sell them to clients and then buy them back for reuse &hellip So we are not that much affected by this increase because we sell high and buy back high we don' t face a severe impact," Mr Hooi said.

 

While Kori will need to add on new steel inventory this year, he said the company' s requirements are not that high now. This gives it some time to observe how steel prices move. He is also keeping a close watch on other construction material prices, which have also gone up.

 

Future sustainability

 

Beyond immediate concerns about labour and input costs, Mr Hooi said the pandemic has necessitated some " soul-searching" in terms of corporate strategy.

 

With Singapore actively looking to reduce its reliance on low-wage foreign labour, construction players such as Kori face tough questions about the future of their business.

 

While automation is the long-term solution, Mr Hooi said technology adoption has not caught up.

 

" The construction industry is still a bit conservative, in the sense that a lot of works are a bit difficult to carry out without some component or input of manual labour," he said.

 

" If you need to do a casting on site, without labour, there is no way to pour the concrete in its designated location. Robotics has not gone to a level where it can replace the ability of humans to do manual labour for the time being."

 

To mitigate this, Kori is looking into how it can improve productivity to reduce its labour reliance.

 

One example is its development of a traffic diversion deck made of precast concrete. Such decks are laid over roads where there are construction works, to enable traffic flow. They are typically made of steel.

 

Precast concrete is a significant step away from Kori' s long-held expertise in steel. The material is also slightly more expensive.

 

But the precast decks use only one-sixth the resources that the traditional decks require, Mr Hooi said.

 

" That is the whole beauty of precasting. You just fit (the deck) in like ' Lego' and it is much wider," he added.

 

But in the near to mid term, Kori will still require a substantial foreign labour pool. The company is currently recruiting tunnelling crew members from Thailand, as workers there are especially familiar with such specialised works and have experience working abroad.

 

Looking into the long term, Kori faces the question of whether it should remain a specialist builder. Not only is labour tight, but competition is rising as well with foreign construction firms entering the Singapore market.

 

Kori' s share price reflects the soft sentiment in the construction industry over the years, having fallen from a high of over S$0.50 in 2013 to S$0.15 as at Feb 19.

 

Its revenue has been on the downtrend since 2017, after the construction industry' s heyday back in 2014.

 

More investments

 

But Mr Hooi said Kori is still able to leverage its track record to clinch projects, and points to this year' s Budget as evidence of more investments to come.

 

" Significantly, the announcement of green bonds on select public infrastructure projects is greatly welcomed as this provides us the confidence that public sector infrastructure development continues to anchor our industry in the future economy," he said.

 

The company has thought about other business opportunities such as property development, but there are no concrete plans for now.

 

When asked what type of development could be of interest to Kori, Mr Hooi said: " It' s hard to say. The better option would be if it taps our expertise, like if the development requires underground carparks. This may be beneficial for our core business."

 

He also hopes the lessons from the Covid-19 crisis are not wasted: " This situation can' t last. We have to pick up all the fine learning points, adapt, and ensure we carry forward high productivity after the pandemic is over."

CONSTRUCTION services firm Kori Holdings on Monday announced that its subsidiary, Kori Construction, has clinched six contracts in three projects worth an aggregate of S$81.2 million between September 2020 and January 2021.

 

In a bourse filling, the Catalist-listed group said one of the projects, awarded by the Singapore branch of China Railway First Group Co, is for strutting works and sheet piling works at the North-South Corridor (Tunnel) between Marymount Lane and Pemimpin Place.

 

The contract for strutting works has the largest value, and is scheduled to be completed in 60 months from its commencement in the first quarter of 2021, said the group.

 

The second project was awarded by Shanghai Tunnel Engineering Co (Singapore) for tunnel strutting works as well as Kallang River strutting works at the North-South Corridor (Tunnel) between Sin Ming Avenue and Ang Mo Kio Avenue 3.

The third project, awarded by Lum Chang Building Contractors, is for Mandai strutting works and sheet pile works at Mandai Lake Road.

 

Hooi Yu Koh, executive chairman and CEO of Kori Holdings, said: " We are pleased to have been awarded these projects for the various strutting, decking and sheet piling works. This affirms our long-standing proven track record we have established over the years. It also signifies the trust and confidence that our customers and partners have in us."

 

The projects are expected to have a positive impact on the group' s earnings per share and/or net tangible assets per share of the group for the financial year ending Dec 31, 2021.