In January, Singapore’s Building and Construction Authority revised its construction demand forecast for this year to $47 billion and $53 billion. Although this is more than double the $21 billion in 2020’s pandemic year, KSH will need more time to return to its own pre-Covid levels, says Choo Chee Onn, its executive chairman and managing director, in an interview with The Edge Singapore.
In FY2025 ended March 31, KSH reported a 15.1% y-o-y decline in project revenue of $178.1 million as it worked to complete its pre-Covid projects, as well as the projects tendered for during the pandemic, so that it could hand them over to its clients promptly.
Pandemic woes
During the pandemic, the group, like many in the industry, was squeezed by rising material and labour costs while measures to curb the spread of the virus caused delays. In FY2021, KSH reported a loss of $3.8 million, compared to FY2020’s profit of $15.8 million. “We couldn’t let our sub-contractors and material suppliers suffer, so we supported them,” says Choo. He notes that most contractors lost money during the pandemic, as they supported subcontractors, adding that costs would have been double had they engaged new subcontractors or suppliers.
See also: Can Centurion’s REIT spin-off mark a new growth chapter?
Now with the industry enjoying better days, KSH is taking active steps to mitigate the impact of rising labour and material costs that “won’t go away”. One way is by locking in prices with suppliers and subcontractors.
Despite the lower reported earnings, KSH is poised for better days ahead. As at March 31, 2024, the group had a construction order book of over $379 million. A year later, its order book dropped to $230 million on completion of previous projects. Since then, with new contracts such as the one announced on Aug 22 to build a laboratory, KSH’s order book has increased to approximately $315 million. Choo is confident that this number can grow by 25% by the end of the current financial year.
While this is some way from its pre-Covid peak of around $800 million, Choo is “not in a rush” to match this number as there are more practical concerns, such as training new workers and coordinating with subcontractors and suppliers.
See also: Thakral unlocks value with GemLife IPO, India expansion and another potential IPO
Over this calendar year, KSH has taken part in tenders for over $2 billion worth of projects. Choo is careful to participate only in projects where he has a competitive advantage, such as laboratory and research buildings. KSH has a track record of over $700 million worth of laboratory and research-related projects across both the public and private sectors.
For these projects, contractors may be pre-qualified based on their track record and expertise, rather than being selected through an open tender process, which might emphasise cost more. “That’s the kind of project we want,” he says.
Like many contractors, KSH is also involved in property development, although it typically does so through joint ventures. “Our core business is in construction. Many of our clients are property developers, and it’s important that they continue to see us as a trusted partner rather than a potential competitor. That is why we focus on property development through joint ventures, where we collaborate with partners, instead of pursuing projects independently,” Choo explains.
KSH now has four projects in Singapore: the 99-year leasehold mixed-use development One Sophia/The Collective at One Sophia, the freehold 172-unit The Arcady at Boon Keng, the 99-year leasehold 440-unit Sora, and the freehold 113-unit Bagnall Haus. All its projects have “achieved satisfactory sales since their respective launches and are expected to generate positive margins”, states KSH in its annual report for FY2025.
One Sophia/The Collective at One Sophia is developed by Sophia Residential and Sophia Collaboration, a joint venture (JV) comprising CEL Development, Sing-Haiyi Crystal, and Ultra Infinity. The three companies hold 40%, 30%, and 30% respectively, in the share capital of each JV company. Ultra Infinity is a company equally owned by KSH Holdings, SLB Development and Ho Lee Group. KSH’s effective equity share is 10%.
The Arcady at Boon Keng is developed by a joint venture between KSH Holdings, SLB Development and H10 Holdings, with KSH’s effective equity share being 49%.
Meanwhile, Sora is developed by CEL Development, Singhaiyi Group and KSH Holdings. KSH’s effective equity share is 20%. Finally, Bagnall Haus is jointly developed by Roxy-Pacific Holdings, SLB Development, H10 Holdings of Ho Lee Group and KSH Holdings. Here, KSH’s effective equity share is 12%.
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
The JV model also applies to the group’s property developments in China.
KSH’s Chinese properties
KSH is building two “mega” residential projects in the county-level city of Gaobeidian, a Toa Payoh-size city 82 km south of Beijing, and around 20 km north of the Xiong’an New Area, meant as an additional administrative centre to alleviate overcrowding in Beijing. Estimated to cost some US$93 billion ($119.9 billion), Xiong’an is also meant to help drive the development of China’s Beijing-Tianjin-Hebei cluster, the way Guangzhou and Shenzhen are doing for the Pearl River Delta and Shanghai for the Yangtze River Delta.
“The difference for us is that Gaobeidian is between Beijing and Xiong’an. The residential properties in Xiong’an are mainly for release. The potential buyers in Xiong’an and the nearby area will be attracted to purchase residential properties in Gaobeidian,” says Choo. He notes that the city is a 45-minute drive from the capital and approximately 19 minutes by high-speed rail.
Units in Gaobeidian from KSH’s two ongoing developments in the Singapore Sino Health City, Zhong Xin Yue Lang (ZXYL) and Zhong Xin Yue Shang (ZXYS), were among the residential properties in the secondary market to see selling prices rise to RMB20,000 ($3,611) psm upon the announcement of the Xiongan development plan. Authorities have since capped the selling price for new developments at Gaobeidian at RMB8,000 psm. Choo explains: “For buyers from Beijing, RMB20,000 psm was very cheap, because in Beijing the minimum selling price was RMB60,000 psm to RM80,000 psm, or even higher at RMB100,000 psm.”
KSH has been assigned 8,000 Chinese mu, or approximately 533.33ha, to develop and has secured approval to commence works on approximately 2,900 mu. “We have considered developing 14,000 to 15,000 residential units, with amenities like gardens and parks,” says Choo.
He notes that there is “a long way to go”, with only about 3,000 units built. At the same time, take-up has been slow. Phase 1 of construction for both ZXYL and ZXYS is completed, with 85% of the 812 units and 98% of 1,011 units sold, respectively. For Phase 2, however, only 36% of ZXYL’s 746 launched units have been sold, while only 204 units of ZXYS’ additionally planned 1,011 have been built.
Choo says that phase 2 is planned for completion by FY2026, to encourage further take-up. For units that have not been put on the market, however, works will be delayed by an additional year. “But we never stopped, we continue because we want the buyer or purchaser to have confidence in us that we can finish the project, so we cannot stop, but we can slow down part of the project,” he adds.
Both projects, while anchored as residential developments, will also feature recreational and commercial facilities. ZXYL is partnered with China’s National Sports Bureau to build a mountain climbing training centre, which will feature what KSH calls the “world’s tallest man-made rock-climbing wall”, sitting on a total site size of 30,000 sqm, boasting 18 climbing routes and 20 competition routes.
Meanwhile, ZXYS will see the construction of the Green Health Food Safety Testing Centre, which aims to be the largest food wholesale distribution centre in China, spanning 3.3 million sqm in area and capable of accommodating a working population of 300,000.
“The whole project is a township. The [Chinese] government doesn’t approve it based on a purely residential proposal, but an entire township with residential, commercial offerings and other essential amenities,” says Choo.
In total, KSH estimates that both developments will support approximately 48,000 households. We’re going to watch how the market moves because the central government has put in a lot of measures to boost the market, but these are lean times because the confidence level is not there at this point in time. In the market, it may take a long time for the confidence level to recover to the pre-Covid pandemic era,” says Choo.
Understanding the China market
To be sure, this is not Choo’s first experience of a Chinese property slowdown. He notes that market cycles are not uncommon, with a resurgence following a slowdown often characterised by a steep upward trajectory. He says, “You have to have willpower.”
With equity stakes of 22.5% and 33.75% in ZXYL and ZXYS, respectively, revenue stemming from China made up just 2.3% of KSH’s total revenue in the FY2025. The marginal share comes from the group’s business model of taking on JVs for property development projects, be it in Singapore or China.
For the Chinese projects, KSH has partnered with Singaporean firms Oxley Holdings, Lian Beng Group, Heeton Holdings Limited, and Zap Piling. At the same time, the group has teamed up with the Chinese firm Beijing Jia Hua Hong Yuan Investment.
Still, should China’s prolonged property slowdown see no signs of picking up in the next two to three years, Choo is unafraid to move on. “If the market continues to be like that, we will think of exiting the China market,” says Choo.
Thus, in the near to medium term, KSH will be paying more attention to growth opportunities in the home market. Beyond residential projects, KSH is also eyeing industrial projects, particularly within the food industry, given the ongoing focus on food safety, in collaboration with JV partners.
“Because the market is very hot now, we’re worried that some cooling measures will come,” says Choo, adding that industrial projects are not affected by factors such as additional buyers’ stamp duties.
To support its growth, KSH completed a private placement on Aug 21, raising $8.67 million by successfully selling all 28.9 million treasury shares at 30.5 cents apiece. The investors are a group of local fund managers, including ICH Capital, GinkoAGT Global Growth Fund and Lion Global Investors. These investors are already in the money, with KSH’s share price closing at 41 cents on Sept 10, up around more than 95% year-to-date, giving the company a market cap of more than $220 million. The placement was handled by Evolve Capital Advisory and Maybank Securities.
Choo maintains that KSH, placement aside, has enough cash to fund its working capital needs. KSH plans to set aside part of the proceeds to buy back its shares if and when it deems it to trade at levels that are “very much undervalued” to be fair to the minority shareholders.
