Soilbuild battens down with robust order book growth

 

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As of Dec 31, 2024, the company&rsquo s order book stands at a whopping $1.26 billion, a figure that executive director and group CEO Lim Han Ren says will provide healthy earnings prospects for the next two to three years.

Of this amount, $647.5 million comes from the group&rsquo s securing of a contract to construct the PSA Supply Chain Hub at Tuas.

The complex will consist of warehouse buildings, gate buildings, a main intake substation, and ancillary buildings at Tuas Port. It is expected to be completed by the third quarter of 2027.

For its 2HFY2024, Soilbuild reported earnings of $19.2 million for the six months ended Dec 31, 2024, up 222% y-o-y.

This brings its FY2024 total earnings to $26.6 million, a surge of 263.3% y-o-y.

The growth was largely led by higher revenue from the company&rsquo s construction business, which was up 52.1% y-o-y to $319.4 million.

Besides the contract from PSA, projects handled by Soilbuild included the construction of a public housing development at Toa Payoh and a sustainable and energy-efficient logistic facilities at Greenwich Drive for DB Schenker.

Starting from its 2HFY2024, Soilbuild has started progressive recognition of the PSA contract, which commenced last May and will last between two to three years.

Nonetheless, the company is still eager for more. &ldquo We are still actively tendering the market to make sure we are able to refresh our book segment,&rdquo says Lim in an interview with The Edge Singapore.

This is especially important for the CEO, owing to the construction industry&rsquo s lumpy nature. 

He explains: &ldquo We mitigate this [lumpiness by] having continued order book wins to be able to sustain us throughout a longer period. We have different project schedules, so while we are executing projects that are coming to completion, we are looking for a new order book so that upon completion the team automatically jumps to the next project that comes online.&rdquo

This was shown in FY2020, when the Soilbuild suffered losses of $24.3 million, owing to the detrimental effects of the Covid-19 pandemic.

&ldquo For a period of time during the lockdown, nothing could move. When things did open up, we had to implement new safety measures, safety distancing, etc. So that resulted in reduced productivity on set and also increased our costs, new processes and total cost. And then to add on to that, there was a severe lack of labour as well,&rdquo says Lim.

&ldquo But instead of walking away from certain projects, we honoured our commitment to our clients to ensure that we still delivered on time and with quality as well.&rdquo

Such was the dire situation that Soilbuild&rsquo s co-founder and current executive chairman, Lim Chap Huat, as the single largest shareholder, contributed capital in the form of a $10 million interest-free loan to tide the business through the period so that the company could complete existing projects and continue to win new ones.

From finance to construction

It was during this trying pandemic-induced period that CEO Lim found himself joining the company.

Prior to that, Lim had been working in the private equity industry, after studying finance and accounting in New York.

&ldquo I joined in February 2020, and I came in with the hopes of getting more things done, but then, unfortunately, because of Covid-19 everything came to a halt.&rdquo

Lim says that this initial phase proved to be the most challenging for him.

&ldquo For one, I had to learn a business that was very technical in nature with no background at all. And two, I had to fight fires for all my projects, because suddenly costs went way too high, we didn&rsquo t have the manpower to execute jobs and clients were chasing me about completion dates.&rdquo

Thankfully, the elder Lim was present to guide the now-CEO through the initial difficulties, as did Soilbuild&rsquo s veteran staff.

It was during this &ldquo low point&rdquo that Lim saw an opportunity to look at the business through a different lens, believing that with nothing to lose, it was the optimum time to adopt digital and sustainability-focused practices moving forward.

One such initiative put forth by Lim was the adoption of building information modelling (BIM) software, which helps the company better plan and design and be more efficient in the way projects are executed. 

&ldquo When I joined the business, BIM was really common in the market, but I saw that it was very underutilised. So as part of our growth strategy at Soilbuild, we developed more capabilities from a digitalisation angle,&rdquo says Lim.

This included creating fly-through videos of potential projects for contract tenders and using BIM as a one-stop shop for clients to manage projects and track progress meetings.

Traditionally, tendering for contracts involved showcasing 2D architectural plans to clients for visualisation. 

Lim, however, saw a gap from a client perspective, as they, unlike contractors who deal with these plans daily, are not as familiar with such plans.

&ldquo They are not able to completely visualise how the completed building will look like. Now when I tender for a job, I' ll show them a detailed video of the building, including both the external and internal space, so they more or less have a sense of what they&rsquo re looking at,&rdquo he explains.

&ldquo This also gives me the opportunity to engage with them closer, so that they will understand some of the capabilities that we have, and I believe that this has helped me win some of our recent tenders,&rdquo he adds.

Lim has also adopted AI capabilities to improve the company&rsquo s safety standards.

&ldquo We utilise AI in our CCTV cameras. We have these cameras at our sites, on our tower cranes and at the parameters of our sites. We work with software whereby observation occurs round the clock, and it is able to track safety and high-risk activities, be it a worker who is under a suspended load or a worker who is working near a forklift or machinery.&rdquo

If a danger or safety risk is present, the CCTV camera will capture an image and automatically send a notification to a mobile group chat where the relevant project leaders, managers and safety officers are then able to respond immediately. 

&ldquo That said, the camera is not 100% accurate based on the technology now, it' s about 60% to 70% accurate, but it' s better than not having any AI implementation at all,&rdquo says Lim.

Here to stay

While Soilbuild&rsquo s adoption of technology and AI are more recent actions, the company&rsquo s involvement with sustainability began with the elder Lim&rsquo s liking for green spaces.

Soilbuild constructed its first Green Mark non-industrial building in 2010 &mdash the Solaris building located at One North.

Features include a 1.5km landscape ramp encircling the building which helps mitigate heat, thereby reducing energy consumption by around 30%.

On the building&rsquo s roof, gardens allow the harvesting of rainwater and solar shafts allow natural light to penetrate into the interior of the development.

CEO Lim says that in some ways, the elder Lim has always been an advocate for sustainability.

&ldquo [Chairman Lim has] always been very intrigued with building facades and incorporating plants and landscapes around structures. It' s more pleasant-looking and encourages a greener approach to design, so I guess that was his main motive.&rdquo

The DB Schenker project, Soilbuild&rsquo s latest sustainability-focused building, requires Soilbuild to commit to certain sustainability targets, including reducing carbon footprint and water consumption.

To achieve this, CEO Lim says that the traditional diesel gensets used to power tower cranes and heavy machinery on-site were replaced with battery energy storage systems.

&ldquo We also equipped our site offices with solar panels to reduce our energy consumption. We recycled our construction waste timber frames were made into kitchen tables for our workers, and scrap bars into storage racks for some of the materials.&rdquo

Although Soilbuild has traditionally been focused on industrial buildings, in recent years, the company has begun an internal push to include higher-value facilities such as industry 4.0 manufacturing facilities and semiconductor facilities with cleanroom requirements, Lim says.

&ldquo The cost to build these facilities is definitely more, because there are a lot more specialised requirements for the building, such as epoxy floors for cleanroom setups &mdash all of this requires higher-value design and specifications. With that comes the increased amount of energy required for the building&rsquo s construction, and hence increased cost,&rdquo explains Lim.

The company is also considering experimenting with robotics for painting, to cut down reliance on labour and increase efficiency.

&ldquo This is something we will explore&hellip I do see some benefits in that it technically should speed up the painting time, but there are also other things to consider, like the setup time of the robot.&rdquo

Despite these evolving strategies, Soilbuild remains committed to its core mission.

With the Building and Construction Authority (BCA) forecasting a steady stream of infrastructure projects in Singapore over the next few years, Soilbuild is keen to secure its fair share of new contracts to make sure it maintains a healthy order book.

Lim says: &ldquo We are here to stay. There aren&rsquo t that many local contractors left in the market. Singapore is at the age where buildings and facilities also require redevelopment. So we are definitely here to grow with the country.&rdquo