Koon Holdings

Koon Holdings: The Straits Times reported today that a $1.1b contract has been awarded to Japanese construction firm, Penta-Ocean, and a wholly-owned subsidiary of Koon Holdings, Koon Construction & Transport. Spanning over the next few years, the works involve clearing more than 1,000 ha land and strengthening the soil, before the new Changi Terminal 5 (T5) and a third runway can be built over the existing reclaimed land. Scheduled for completion by 2025, the new airport facility will be able to process up to 50m passengers annually. As a guide, Changi Airport has capacity to handle 66m passengers now, and will be able to handle up to 85m passengers by 2018 once T4 is up and running, and T1 is expanded. Penta-Ocean, which specializes in marine works and land reclamation, has previously completed such works at Jurong Island, Pasir Panjang Container Terminal (PPCT), Marina Bay, Tuas, Singapore Changi Airport and Esplanade. Meanwhile, SGX-listed Koon Holdings, a Singapore-based main contractor, has partnered with Penta-Ocean on past JV projects including those for PPCT and Tuas. While Koon has yet to make a corporate announcement on this contract win, the news is an overall positive considering the large size of the project, and relatively small revenue base of Koon (FY13 sales: $220m). Going forward, the transport ministry is also likely to dish out other contracts pertaining to the build out of airport infrastructure. Potential beneficiaries in the running for such projects include Capitaland, Yongnam (structural works), Hock Lian Seng (aircraft parking aprons and taxiways, Ley Choon (airfield construction) and OKP (airport runway). Over the longer term, airline services operator, SATS may benefit from the higher passenger flows through Singapore, while SIA Engineering may see upside from increased ground handling contracts, arising from the expected spike in passengers and cargo.