Sunhuan Ltd, construction services provider aims for Hong Kong Listing

Sunhuan Ltd, construction services provider aims for Hong Kong Listing

Sunhuan Ltd, a construction services provider in Singapore, has filed an application for an initial public offering in Hong Kong.

Since 2008, Sunhuan has been one of the top five construction firms in Singapore’s public housing sector. It has more than HK$6.4 billion worth of contracts and a 4.96 percent share of the Singaporean market, according to market research firm Ipsos.

The group first started as Sunhuan Construction in 1993, focusing on public housing programs of the Singapore Housing and Development Board.

After attaining the highest grading from the Building and Construction Authority, the group is now qualified to undertake public sector construction projects with unlimited contract value.

It has built more than 8,000 public homes and community facilities, including libraries, schools, prison complexes and railway stations. With its over 20-year business relations with HDB, the housing agency is its single largest customer. Last year, 95 percent of revenue came from HDB.

In its IPO application, the builder admitted that any decrease in the volume of HDB projects may affect its financial result.

The contractor plans to use the proceeds from its proposed listing to purchase machinery and software to raise productivity.

Aside from hiring more staff, the company will provide different training programs and upgrade courses.

Safety consultants will be recruited to improve the general safety and productivity at its construction sites. Proceeds from the IPO will also be utilized as working capital.

Last year, revenue rose 22.64 percent to S$291.67 million (HK$1.6 billion), thanks to rising revenue from building and construction services.

But net profit dropped 27.33 percent due to a 68 percent surge in subcontractor charges as the firm added another subcontractor after the non- performance of two subcontractors.

Gearing ratio, or total borrowings relative to total equity, stood at 173.3 percent, 168.6 percent and 136.7 percent as of the end of 2012, 2013 and 2014.

It attributed the downtrend to the faster rise in the level of equity than debts.

Demand for public housing construction services will rise, Ipsos said.

Since the government’s plan to increase the number of residents was approved, more housing projects will be undertaken in the near term, benefiting the construction sector.

Singapore’s Building and Construction Authority expects the cumulative value of construction demand in both the private and public sectors to reach between S$29 billion (HK$164 billion) and S$36 billion (HK$204 billion) this year.


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