Venturing into Riau with Gallant Venture Ryobi Kiso …gallantventure.listedcompany.com/newsroom/Gallant2.pdfmore complex civil engineering projects that will generate higher revenues

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Challenger Technologies – Shaping Singapore’s IT Retail Landscape

WITH more than 27 years of experience in the IT industry, Mr Loo Leong Thye, Chief Executive of SGX Mainboard-listed Challenger Technolo-gies Limited, and his management team have pioneered several initiatives in Singapore’s IT

retail landscape.Highlighting some of Challenger’s achievements, Mr

Loo said, “Challenger was the first and still the only IT retail company with a flagship megastore where consumers can find a diverse range of IT products and services all under one roof. In addition, our megastore in Funan centre has been operational 24 hours with effect from 1st March 2011.

For the first time in our operating history, we were opened during the first and second day of Chinese new year in 2011 at five of our largest stores.

And we also introduced a membership system where Challenger’s members can get updates and special offers of IT products. This membership base has grown to over 230,000 loyal members over the years.”

With convenience and service as its hallmarks, Challenger has come a long way since its humble beginnings as sole-proprietorship business in 1983. Currently, the Group is the leading IT products and services provider in Singapore with an extensive network of 26 strategically located retail outlets, comprising of 1 megastore, 16 superstores and 10 speciality stores.

Year 2010 has been a milestone year for Challenger as the Group delivered a record financial performance as net profit increased 24% to S$13.7 million on the back of a revenue growth of 26% to S$240.9 million.

Commenting on the sterling financial performance, Mr Loo said, “This is a testament to the Group’s two-prong business strategy to expand its retail operations and improve performance of its existing stores.

Expanding of our retail operations began in May 2006 and since then, we have added more product categories like digital cameras, LCD/LED TVs to broaden our revenue base. This has led to a strong retail performance in Singapore as we extend our outreach and service enhancement initiatives.”

Expanding its business presence across the Causeway, the Group will open three new stores in Malaysia at Mahkota Parade in Malacca, Bangsar Shopping Centre in Kuala Lumpur and Suria KLCC in Kuala Lumpur by the first half of this year. This will bring the total number of Challenger stores to four in Malaysia, including one megastore in Mines Resort City, Selangor.

OKP Holdings: Growing our business and our future, here and abroad

IN times of turmoil in the stock market, it’s important to remember that the business, not the stock price, is the story,” says Mr Or Toh Wat, group managing di-rector of leading homegrown infrastructure and civil engineering company OKP Holdings. Not that OKP’s

financial performance has ever made anything but a good story. In 2010, the Group recorded S$139.9 million in revenue, with $17 million profit after tax attributable to equity hold-ers – an increase of 7.6 percent and 17.4 percent respectively. 2010 was also when OKP made it to the Forbes Asia “Best Un-der A Billion” list, for its consistent earnings growth and the value it returns to its shareholders.

This year, OKP is already off to a good start: in the first quarter, it secured $94.4 million worth of projects, bringing the total value of its order book to $375.8 million in secured civil engineering construction contracts.

“We think it’s a creditable performance; of course, we will always try to better it, going forward,” says Mr Or modestly.

There is plenty of opportunity for doing so. This year alone, more than 55 percent of overall construction demand is expected to come from public sector projects of the sort OKP excels at, and this level of demand is projected to continue into 2013. For 2011, the Singapore government has already announced its intention to continue investing in public infrastructure, including projects such as Stage 3 of the Downtown Line, Tuas West MRT Extension and various major roadworks.

OKP is currently participating in a number of tenders for such projects, including the Downtown Line and Tuas West MRT Extension. Earlier this April, the Group secured a design-and-build contract for roadworks at the interchange at Tampines Expressway, Sengkang West Road and Seletar Aerospace Way, and Mr Or is confident that more contract wins will follow.

“Our leading position in the public sector arena will put us in good stead to benefit directly from the slew of contracts

anticipated in the years ahead,” he says. “Over the years, we have broadened and deepened our expertise and we are ready to take on bigger challenges in the form of larger and more complex civil engineering projects that will generate higher revenues and profitability.” Such projects may also raise the company’s profile in the construction industry, added Mr Or.

Still, OKP is mindful that its future depends much on its ability to attract, develop and retain the right people with the right skills needed to meet current and future project demands. As such, it continues to invest heavily in the development of its people through extensive training programmes to provide continuous upgrading and education to its staff members.

At the same time, the Group continues to exercise prudence, both financially and in business operations, remaining selective in its tender participation and taking on projects which are within its capabilities that promise reasonable returns. Business opportunities continue to present themselves both in the public as well as the private sector. In recent times, OKP has extended its expertise beyond public sector infrastructure project into oil and gas and last year, it obtained shareholders’ approval to expand its core business to include Property Development.

“Our financial strength enables us to explore larger projects and investments, either here or overseas,” says Mr Or. In addition to looking actively for business opportunities overseas, OKP remains focused on its core businesses of construction and maintenance for public infrastructure, which have been its mainstays since the Group’s establishment in 1966.

“We are proud to be involved in building and maintaining the road infrastructure in Singapore, and continue to augment our lead in this market through the way we operate and execute our projects,” says Mr Or.

Venturing into Riau with Gallant Venture

PRODUCTIVITY has always been widely advo-cated in Singapore and from last year’s Budget, it is much more apparent for on-going and future construction activities to adopt new processes and technologies to

improve productivity significantly.This macro trend seems to bode well for

Singapore’s ground engineering piling specialist Ryobi Kiso Holdings Ltd. A pioneer in eco-friendly piling solutions, the SGX Mainboard-listed Group has recently adopted new subterrain pre-cast technology that will accelerate construction time and save resources for its customers in a wide range of property and infrastructure developments.

Explaining the merits of this subterrain pre-cast technology, CEO of Ryobi Kiso Holdings Ltd, Mr Ong Tiong Siew said, “This precast D-Wall method is a new method to build permanent retaining walls in the construction of one to two storey basements.

Traditional construction methods will require excavation works to be performed before the retaining walls can be built. Our technique does not require the full excavation of the construction site, hence this will shorten the timeline of a construction project, reduce raw material usage and improve productivity.”

The Group has received encouraging response for this product since it was offered alongside its ground engineering services in 2011

Mr Ong added, ““Innovation is an integral part of our ground engineering activities and the Subterrain Pre-Cast Technology is testament to our technological capabilities. With a proven track record, customers see Ryobi Kiso as a reliable and quality ground engineering solutions provider.

This is particularly important as developers increasingly seek to ensure a timely and successful completion of a development since land costs in Singapore significantly outweigh the development and construction costs.”

On the financial front, the Group has always been margin-centric in its business approach and this is reflected in its profitable bottom line every year.

Highlighting the project pipeline in the construction industry, Mr Ong elaborated, “There are continual growth opportunities in private property development, public housing and infrastructure projects (such as Downtown Line 3, HDB public housing projects and government land sales and enbloc redevelopments).

The barriers to entry to the piling industry is relatively high in light of the high capital expenditure on the heavy equipment used as well as higher risks associated with the nature of piling activities.

By keeping a healthy level of order book, we have the flexibility and ability to take on new choice projects that are accretive to our earnings and track record.”

GOING to Bintan on a tour package? Many of the local tour packages and its related services are probably developed by BRC Tours, a unit of Bintan Resorts Cakrawala which is a subsidiary of Gallant Venture Ltd.

Taking a ferry there? Gallant Venture owns and operates Bintan Resorts Ferries as well as the ferry terminal in Bintan. Staying at one of the four major integrated resorts within the Bintan Resorts location – Nirwana Gardens, Banyan Tree/Ang-sana Bintan, Ria Bintan/Club Med Bintan or Bintan Lagoon Resorts? Don’t be surprised – a subsidiary of Gallant Venture has been providing integrated master planning and support services to them.

Bintan Resorts was founded in 1990 as a collaborative initiative between the Governments of Singapore and Indo-nesia. Since this collaboration, the consortium’s investments and actions in Bintan have contributed completely new fea-tures and components of excellence in this area. The consor-tium has also since evolved into a public listed company in Singapore called Gallant Venture with the following initia-tives put in place:

1. A system of ferries and terminals that connect Bintan to Singapore and Batam

2. A large reservoir, water treatment and distribution systems that supply abundant potable water of World Health Organization standards.

3. Self-supported power generation system 4. Fiber-optic based telecommunications system5. Singapore-standard road system that connects BBT

Ferry terminal to all resorts and townships within Bintan Resorts

6. Private security force to complement the work of Indonesian tourism police force.

7. Private fire-fighting and emergency response infrastructure with supervisory level firemen trained in Singapore

8. Health management system for fighting mosquitoes and several diseases typical to the area. Bintan Resorts is declared “malaria –free” since the inception of this system.

9. Environment control system to ensure that ecological balance (white beaches as well as the natural greenbelts) of the estate are preserved

10. Township for staff-housing with local food and retail shops.

For investors looking towards the near part of the region, Gallant Venture is a company to keep one’s eye on. Its sub-sidiaries have been operating in Bintan and Batam for almost two decades now, backed by very strong investors: the Salim Group, Indonesia’s largest conglomerate, and Singapore gov-ernment-linked corporations such as the Sembcorp.

Resorts are by no means Gallant Venture’s only area of fo-cus. The Group, whose 2010 profit after tax was a comfortable S$9.3 million, actually has four key areas of focus: resort op-erations, industrial parks, utilities and property development. Gallant Venture operates two major industrial parks, Bata-mindo Industrial Park in Batam and Bintan Industrial Estate in Bintan with ready-built factory space for rental or sale and

With an established core operation in Singapore, the Group is looking to diversify revenue streams across countries, business segments and clients in other Asian markets as part of its business development strategy.

The Group has established a foothold in Vietnam with three contracts totalling S$8.7 million to date, where the projects are located in Ho Chi Minh City and Hanoi.

“We have gained significant inroads in Vietnam and we hope to build on this momentum to develop new markets in other Asian economies in the years ahead.” added Mr Ong.

So far, the Group’s balance sheet has been healthy with net cash of S$15.2 million as at 31 December 2010. The Group’s liquidity position is further enhanced by its business activities which revolve around the initial stages of construction works. Henceforth, this results in a lower operating risks and a faster cash turnaround time for the Group.

Mr Ong concluded, “With sufficient financial resources to acquire new machinery and support long term growth, Ryobi Kiso will continue to differentiate ourselves with customised, value-added and eco-friendly ground engineering solutions.”

Ryobi Kiso – Eco-Friendly Piling with Subterrain Pre-Cast Technology

other ancillary services.On top of daily management and operations, Gallant

Venture is a private provider of utilities in Batam and Bintan. It provides power, water, telecommunications and waste management services to the resorts and industrial parks. It owns a total of 27 generators in Bintan and Batam; 14,000 telecommunications lines; and its own microwave tower to supplement local networks. It also has a privately owned and operated reservoir in Bintan, providing some 26,800 cubic metres of water. The utilities segment is, in fact, the most im-portant component of its operations. Last year, for instance, the utilities segment recorded S$119.6 million, more than 50 percent of its total revenue.

With over S$1.7 billion in assets, much of it in land and other inventories, it is no surprise that the Group has recently ventured into the lucrative property development sector.

In Bintan alone, the Group is now developing the 1,300 ha Lagoi Bay Development, located along the beauti-ful shorelines of north Bintan. Lagoi Bay will be Asia’s first master-planned resort village and the new heart of Bintan Resorts.

“It will be to Bintan Resorts what Kuta is to Bali and Pa-tong is to Phuket,” says Mr Eugene Park, Chief Executive Of-ficer of Gallant Venture.

Apart from the much anticipated Alila Resorts which has started land clearing in Lagoi Bay, other “live” projects in-clude two other resorts on the beachfront as well as the 162 unit residential villa development, Pantai Indah. Separately, Bintan Resorts will also see the start of work in Treasure Bay, an integrated resort/marina/residential development and the development of new recreational facilities. Other infra-structure projects in the pipeline include a private interna-tional airport and an extension of the current ferry terminal to include berths for private yachts.

Gallant Venture has also recently snapped up another property development opportunity, this one in Shanghai, China. The Group has acquired a stake in the 4.2 ha Lao Xi Men residential project, which is expected to yield consider-able returns in the long term. Also, quite apart from property, it has acquired a stake in iron and coal mining company PT Sebuku Iron Lateritic Ores (PT SILO), which is expected to not only contribute revenue but to provide hedging in Gallant Venture’s power generation business.

“We intend to explore new business opportunities, stra-tegic partnerships and investments, and organically grow our four businesses,” says Mr Park.

Mr Loo added, “We take a cautious approach in our expansion and after 3 years of retail experience and brand building in Malaysia, we have decided to build on this momentum and introduce the retail concept for consumers to purchase IT products in chain stores.”

Recognising that the IT retail scene is highly competitive, the Group has also place significant emphasis to continuously build its brand name to differentiate itself from its peers which has led to a high brand recall rate and greater more consumer confidence. Just as important, the Group has been developing its human resources to ensure that the Group remains aligned with new consumers’ trend and high service standards.

Providing some insights on the Group’s business initiatives, Mr Loo elaborated, “In our business, we have to be nimble to harness new market opportunities. One good example was the Apple phenomenon whereby the adoption of Ipad, Mac book and Macs became very popular in 2010. Our outlets swiftly took on the concept of having Apple Shops whereby we enjoy benefits similar to Apple Premium Resellers in terms of stock allocation and ability to sell a wider range of Apple products.

This will not be impossible without the collective hard work and support from our management team and workforce.”

While the Group’s main focus is on its core IT retail business, it has also nurtured two other business segments to add new revenue stream to the Group. CBD eVision Pte Ltd operates an electronic signage services mainly to shopping malls, while Incall Systems Pte Ltd (“Incall”) is in the business of operating call centres, event management, direct marketing, database management and publishing of directories. In addition, Incall offers extended warranties for various electrical and IT products through its Star Shield Extended Warranty programme (“Star Shield”). It is the exclusive service provider for Star Shield sold at Challenger retail stores in Singapore.

Building on a strong foundation for its next phase of growth, the Group is poised to capitalise on the new market opportunities that are driven by a high product replacement cycle.

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Mr Eugene Park, CEO, Gallant Venture.