Soon Hock’s listing also attracted a long list of cornerstone investors. They are Amova Asset Management Asia, ICHAM Master Fund VCC, Maybank Asset Management Singapore, Maybank Securities and UOB Kay Hian, which are investing on behalf of certain high net worth clients, as well as five private investors, Deepak Lakhi Ramchandani, Gay Soon Watt, Ong Soon Liong, Toh Leong San Jack and Von Lee Yong Miang.
The cornerstone investors will subscribe for 61.4 million new shares valued at a total of $35.6 million. The company expects to raise about $34.6 million in net proceeds, which will be used to fund the acquisition of new land sites and buildings for redevelopment. It will also partly finance the cost of its existing property developments and redevelopment projects in the pipeline.
Projects under development
The group currently has two projects under development: Stellar@Tampines and Skye@Tuas. The Tampines property is a ramp-up industrial development with 311 strata-titled units. The Tuas property is a heavy industrial purpose-built development with a ceiling height of up to 12.95m.
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Both projects are sited on JTC land and have tenures of about 30 years. Stellar@Tampines is expected to have a gross development value (GDV) of $326.5 million, while Skye@Tuas is expected to have a GDV of $354 million. The expected GDVs are based on valuations by Savills dated April 30.
The group also has two properties in the works, 20 Shaw Road, the former freehold Ching Shine Industrial Building, with an estimated GDV of $235.4 million and 56, 58, 60 and 62 Senang Crescent, four individual freehold strata buildings with a GDV of $60.3 million.
Soon Hock also has eight multi-user strata developments with a total GDV of over $1 billion located around the island, including Tuas, Tampines, Bartley, Woodlands, Yishun and Pioneer.
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Property developers tend to report lumpy numbers, and this appears to be especially so for Soon Hock. From FY2022 to FY2024, the group reported total revenues of $1.3 million, $264.7 million, and $7.9 million, respectively. Revenue for its 1QFY2025 stood at $651,000. The group’s financial year ends in December, and all of its revenue was derived in Singapore.
In FY2022 to FY2024, the group’s earnings stood at $2.6 million, $29.4 million and $3.3 million, respectively, while it reported a loss of $578,000 in 1QFY2025.
In its prospectus, the group states that it recognises revenue from the sale of development properties when each receives its Temporary Occupation Permit (TOP). It is also when the customer obtains control of the asset. So far, the group has four projects in the pipeline that will receive their TOP over the next few years.
Stellar@Tampines is expected to TOP in 1Q2026, while Skye@Tuas is likely to TOP in 1Q2027. The group aims to complete its Senang development by 2027, while 20 Shaw Road, acquired in April, is expected to be completed in 2028.
Ahead of 2028, Soon Hock is constantly on the lookout for more land parcels — be it from public tenders or private deals, says director of project execution Christine Loo, adding that typical project cycles run three years or so. Other developers might take longer, says CEO Tan. Instead of accumulating a large land bank, where the company’s investments are “stuck” until it decides to do something about it, the group would prefer to look for its next piece of land when it’s about to complete its current project.
Dorms in the pipeline
In addition to development, Soon Hock is generating recurring income through other activities, such as operating workers’ dormitories, says CEO Tan. Soon Hock currently has a 300-bed dormitory at its Jalan Papan building and is in the midst of securing approval to convert one block within its 20 Shaw Road property into a dormitory as well.
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The team believes that dorms are a “good, natural, organic” extension, with room to grow, thanks to a steady pipeline of large-scale developments. In 2019, the rental rate per bed stood at $300. The current rate ranges from $450 to $600 and is expected to increase further.
Following the offering, Soon Hock will have 310.6 million shares and a market capitalisation of $180.1 million at listing. The group’s share price represents a premium of 69.8% to its net asset value (NAV) of 34.16 cents as at March 31. On a pro forma basis, after adjusting for the estimated net proceeds of the IPO, the offering price represents a 52.6% premium to the new NAV of 38.01 cents
The group intends to recommend and distribute dividends of at least 25% of its net profit after tax from its listing date to Dec 31, and for the year ending Dec 31, 2026.
CEO Tan says the team is seeking to professionalise and institutionalise the group through its decision to go for the IPO. “We will never know when is the best time to list … for us it’s more of a long-term view,” says the CEO.
He adds that the listing will bring about benefits, including increased publicity, which will enable the company to hire more talent, as well as the ability to secure financing from the public and debt markets. Yet, he acknowledges that the group is “very lucky” to have numerous funding options available, such as the $5 billion Equity Market Development Programme fund from the Monetary Authority of Singapore.
Looking ahead, CEO Tan believes Soon Hock is “well-positioned to capitalise on Singapore’s strength as a leading economic hub in the region, which has resulted in structural growth and rising demand for modern, high-specification industrial properties”.
He adds: “We believe demand for factories, warehouses and worker dormitories will remain positive because of major ongoing infrastructure projects such as the Tuas Mega Port. This demand is further supported by Singapore’s strategic location as a logistics hub.”
The IPO will close at 12pm on Oct 14. Trading of the shares is expected to commence at 9am on Oct 16. This IPO is jointly managed by Maybank and UOB.
