Ley Choon Group (previously Ultro Technologies)

Event: Ley Choon is the new entity that has emerged from the reverse takeover (RTO) of Ultro Tech. The RTO was transacted at $110m, involving an issue of 392.9m new shares at $0.28/sh, resulting in the concert parties holding 90.1% of shares out. To meet SGX listing rules, a compliance placement was carried out, involving an additional issue of 57.6m new shares and sale of 23.4m vendor shares at $0.22. Business: - One of the largest Underground Utilities Infrastructure companies in Singapore, with a track record of over 20 years. - Two key business segments, i) Pipes and Roads: construction and maintenance, sewer pipeline rehabilitation, road and airfield construction and maintenance; pipeworks include water pipes, NEWater pipes, gas pipes, electricity cables, fibre optic cables, sewer pipeline, traffic light systems and telco networks. ii) Construction Materials: operates a plant that produces asphalt pre-mix and a construction waste recycling plant. - L6 registered contractor (highest grade) in the categories of cable/ pipe laying and road reinstatement, pipes and other basic construction materials with the Building Construction Authority (BCA). Able to tender for Spore public sector contracts of unlimited value. - A2 contractor in the category of civil engineering (CW02). Allowed to tender for public sector contracts of up to $85m. - Customers incl govt bodies such as PUB, LTA, HDB, URA, BCA, JTC, and corporates such as Changi Airport Group, SingTel and PowerGas. - Total staff strength of nearly 1000 - Recently expanded to Brunei (51% subsidiary), to conduct civil engineering projects and to manufacture asphalt pre-mix, and to the PRC (70% subsidiary), to provide recycling of construction waste, develop eco-green construction pdts and sale of construction materials. - Ley Choon has an order book of $142.9m as at Jul ’12, to be fulfilled over the next 2 yrs. Industry factors: - BCA estimates public sector construction demand to stay strong at btwn $12 – 15b a year over 2013-14. - Major projects in the pipeline by LTA and PUB (together contributed 64% of Ley Choon’s FY11 revenue) raise order book visibility. These include, i) 21 km North-South Expressway to be built by 2020 at an est cost of $ 7 – 8b ii) 5-km Marina Coastal Expressway to be completed by 2013 iii) Sewer rehabilitation programs for ~1,130 km of public sewers and 50 km of pumping mains from 2012-15. iv) 10 major drainage projects scheduled for 2012 v) $750m to carry out 20 drainage improvement projects over the next 5 yrs Growth plans: - In Spore, Ley Choon intends to upgrade and expand its asphalt plant by building additional silos and increasing the capacity of existing silos. - The co will also enhance technical capability to carry out larger scale and more complex projects, and expand into supplying and trading of pipes and construction materials. - In overseas markets, Ley Choon intends to construct a construction waste recycling plant and asphalt pre-mix plant in Yantai, China, and an asphalt pre-mix plant in Brunei Appendix – Corporate history: - Ultro entered the SGX Watch List 3 Dec ’09. - Failed to exit after 2 yrs, following a botched attempt to switch into the coal mining business. - Granted 6 mths extension till 31 Oct ‘12 to exit the Watch List. Mgt confident that post-RTO, the co will meet the Watch List Removal requirements. - Jul ’12: 10-into-1 shares and warrants consolidation. - RTO of Ley Choon Pte Ltd transacted at $110m. Translates to new issue of 392.9m shares at $0.28/sh. - Corporate name change, compliance placement/suspension, etc. - Ley Choon to resume trading on 6 Aug ‘12. - DMG as Financial Advisor, Stirling Coleman Capital as Independent Financial Advisor