CONSTRUCTION firm Huationg Global expects delays to the completion of project works at the Kranji Agri-Food Innovation Park, as it assists JTC Corporation on investigations into the clearing of Kranji woodland.

 

In a Friday evening bourse filing, Huationg acknowledged media reports that plots of land earmarked for the development of the Agri-Food Innovation Park had been " erroneously" cleared before the conclusion of a baseline study and environmental monitoring plan.

 

It said that JTC Corporation had issued it a stop work order on Jan 13 and that investigations are ongoing. Huationg is unable to assess if the matter would have a material impact on its performance for the current financial year ended December. It will update shareholders once this is ascertained.

DENZAI Holdings on Tuesday completed the acquisition of a 71 per cent stake in Huationg Holdings, a local heavy lifting and specialised transportation provider firm, for an undisclosed sum.

 

Through its wholly-owned subsidiary Denzai Singapore Asia Pacific, the Japanese firm, which similarly provides heavy lifting cranes and special heavy transport vehicles equipment, purchased a 51 per cent stake in Huationg from its founder Lee Chin Tiong, as well as a 20 per cent stake from JA Mitsui Leasing Singapore.

 

The Business Times understands that the deal could be worth more than S$40 million.

 

Together, Denzai and Mitsui & Co (Asia Pacific) - which owns the remaining 29 per cent stake - will be partners of a joint venture in Huationg, which will retain its name post-acquisition. Huationg will also serve as the regional headquarters for Denzai Holdings.

 

Huationg founder Mr Lee also stepped down from the board on Tuesday Jimmy Chua, chief executive of the firm, will take Mr Lee' s place as executive chairman and retain his current CEO position.

 

Speaking to BT, Mr Chua said that the decision came amid the uncertain outlook in the local oil and gas industry, which comprise some 30 per cent of Huationg' s customers.

 

To be sure, Shell had in November said that it will be axing some 500 jobs over the next three years. Chevron will cut at least 10 per cent of its Singapore headcount, and ExxonMobil is letting go of 15 per cent of its global workforce over two years.

 

" I believe the future in Singapore (for us) will be very tough... It' s a good fit to have Denzai on board... we will go beyond our own shores," said Mr Chua.

 

Despite this, over the past few years, Huationg' s profits have been holding steady. From 2018 to 2019, the company' s Ebit (earnings before interest and taxes) increased from S$4.87 million to S$6.01 million, and revenue increased from S$49.23 million to S$50.73 million.

 

Nonetheless, Mr Chua believes that the company will be able to perform even better with the advantage of Denzai' s size and regional presence. The Denzai Group currently has presence in markets such as Taiwan, Bangladesh, Korea and Vietnam.

 

Kohki Uemura, chief operating officer and director of Denzai Holdings, told BT that the acquisition will allow Denzai to gain an even larger market share in the Apac region. At present, Huationg has more than 600 units of machinery and a workforce of more than 500 employees - all of which Denzai intends to retain.

 

Added Mr Uemura: " We can create synergy... Huationg can (also) use our channel with clients all over the world, and engineering capabilities. We can help each other and utilise (both) company' s assets."

 

Huationg was a former Enterprise 50 awards winner in 2015. The award, which seeks to recognise the 50 most enterprising local, privately-held companies who have contributed to the economic development of Singapore, both locally and abroad, is jointly organised by BT and KPMG.