Company Overview

With over 50 years of experience, Kim Heng is an established integrated offshore and marine value chain services provider specializing in engineering, procurement, construction and installation support. Based in Singapore, the Group’s solutions include marine transportation and towage, mooring installation of floating production storage and offloading, subsea marine cable installation, drilling supports, horizontal directional drilling, vessel/rig maintenance and refurbishment, fabrication and newbuilding.

1. Kim Heng has recently ‘rebranded’ itself, can you elaborate more on this?

• In May 2021, we rebranded the Group to Kim Heng Limited, dropping the words “Offshore & Marine Holdings”. This rebranding reflects the next phase of the company’s carbon transition journey, as we expand beyond offshore and marine into renewable energy.

• The Group pivoted away from the oil and gas sector since the downturn in the offshore market in 2014, towards offshore windfarm renewables. The management believes the diversification will reduce our dependence on the existing business and provide additional and recurring revenue streams to achieve long term growth.

2. What Can Shareholders Look Out for or Expect in the Medium Term?

• Kim Heng’s transition to the renewable energy sector is our response to the changing economic landscape given that the Group is leveraging the same skill sets, marine assets and capabilities it has developed over the few decades by reapplying them to the renewable energy and marine construction sectors.

• In early 2018, we diversified to lay submarine cables and completed two shore crossings of submarine cable conduits. In 2019, we completed another two shore crossings of submarine cable conduits for fibre optic cable in Tuas, Singapore.

• As Governments around the world pledge to cut emissions by at least in half by 2030, there was an opportunity for us to partake in the windfarm market in Taiwan. Our first overseas windfarm project in Taiwan was awarded to us in February 2020, and since then, we have completed a total of 6 shore crossings cable conduits for power in the Yunlin offshore windfarm, west coast Taiwan.

3. Has COVID-19 affected your operations and how did you mitigate this?

• During 2020, we responded quickly to the pandemic, taking care of our foreign workers, vessel crews and staff to ensure their well-being and safety while implementing business continuity plans to minimize business disruptions and ongoing overseas projects.

• We are very thankful for the Singapore Government’s support in wage subsidies received under the Job Support Schemes to tide over this difficult period.

4. Describe the Group’s Financial Performance in Recent Years.

• Revenue has improved from $38.0 million in FY2018 to $58.1 million in FY2019. However, due to the COVID-19 pandemic, our revenue decreased to $37.6 million mainly due to project delays.

• In terms of EBITDA, the Group swung from a negative EBITDA of $4.3 million in FY2018 to positive EBITDA of S$630,000 and $4.3 million in FY2020 and FY2019 respectively, excluding one-off non-cash impairments recognised in FY2020 and FY2019.

• Net cash generated from operating activities was $3.6 million and $4.9 million for FY2020 and FY2019 respectively. Cash and cash equivalents stood at a healthy $6.2 million for FY2020 and $3.1 million for FY2019.

5. What is Kim Heng’s outlook for the offshore windfarm renewable energy segment?

▪ The Group believes there are potential growth and development opportunities over the next decade in the renewable energy sector. Having a track record in the construction of offshore windfarms provides us with the competitive advantage to capture more of such projects as the regional countries explore the use of offshore windfarms.

• With our achievement in FY2020, the Group has committed to evolve Kim Heng into a renewable energy solutions provider and has established several new entities to capitalise on the offshore windfarms and marine construction opportunities in Asia. In total, we have a total of 33 subsidiary entities.

6. What are some of Kim Heng’s plans in expanding beyond your current markets?

• Part of our strategy in targeting overseas projects is to ensure that the Group’s infrastructure is put in place to support its growth. We will also need to survey the potential market before venturing into it, to ensure that we have the necessary resources and services and, in some instances, we will need to find the right overseas partner to tap on their expertise and infrastructure in order to ensure project risks are mitigated.

• We intend to focus on the growing global trend in renewable energy and look for opportunities for our offshore windfarm renewables segment. We expect more contract wins in renewable energy projects and continued international expansion across new markets such as Taiwan and Vietnam which are key markets in Asia for the renewable energy segment.

7. What are some of the key initiatives by the Group to ride on the shift towards the renewable energy sector?

• We have developed an integrated roadmap for supporting the offshore windfarm which includes survey and dredging, foundation installation, turbine installation, transportation, cable laying services, and operation and maintenance services.

• We launched four key initiatives to accelerate our transition away from oil and gas into renewable energy:

• Thaitan International – 50% Joint Venture between Kim Heng and Thaitan. Established in October 2020, the joint venture aims to service offshore wind projects and has serviced several offshore windfarms in Yunlin, Taiwan with management seeking to expand its role and search for new projects.

• Bridgewater Offshore – Expanding vessel chartering capabilities with Phillip Capital. It has acquired six anchor handling tug supply and anchor handling tug vessels to enable us to offer vessel chartering, support our offshore renewables business and marine construction at competitive rates.

• Vessel disinfection for COVID-19. A new service aimed at cleaning, disinfecting, and sanitizing marine vessels, in-line with the enhanced precautionary measures recommended by the Maritime & Port Authority of Singapore and comply with stringent standards set by the National Environment Agency.

• Zale Offshore – 24/7 marine salvage and emergency response. Kim Heng’s new incorporated subsidiary with marine units that can be deployed to assist in mitigating oil spills and salvage accidents in the Asia Pacific region.

8. Sustainability and ESG have increasingly been a key focus, how is the Group committed to sustainability?

• The Group's commitment to sustainability begins at the executive level with our Board of Directors, CEO, and senior management team, and is communicated across the Group, through effective implementation of ESG policies and practices.

• We conducted a materiality assessment to identify our material ESG topics and regularly engage our stakeholders to update the materiality of sustainability issues. We also set qualitative and quantitative targets to monitor our ESG performance and achieve our overall sustainability objective of maintaining long-term sustainability in our operations.

9. How has Kim Heng incorporated energy conservation measures in its standard operating procedures and how effective were these measures?

• As a company with shipping operations, our main energy consumption is electricity and marine gas oil, for which we prioritise in our resource management standard operating procedures (SOP). Our SOP follows the ISO 14001 Environmental Management System (EMS), which we use to apply a precautionary approach towards addressing and managing our environmental footprint.

• Our SOP also ensures that we follow the International Maritime Organisation (IMO) Ship Energy Efficiency Management Plan (SEEMP), which ensures that all vessels operate with energy efficiency. In FY2020, our energy consumption at the shipyard reduced by 27% and fuel consumption at vessels reduced by 47%.

• Considering that shipping operations were disrupted by the COVID-19 outbreak, we are unable to ascertain the effectiveness of the energy conservation measures. Nevertheless, we will continue to implement and enhance our energy conservation measures and with our venture into renewable energy, we believe that our carbon footprint will be managed effectively.

10. Why do you think investors should take a closer look at Kim Heng? 

• Management believes that the Group has displayed resilience and shown its ability to bounce back from the challenging marine and offshore industry.

• We took on several initiatives to improve the company’s cost structure. This allowed us to re-stabilise and seize new opportunities to re-start growth as we entered new markets and sped up the development of new capabilities by leveraging on our knowledge transfer from our many years of experience in the marine, oil and gas industries.

• Kim Heng has also since diversified into the renewable energy segment which can provide additional revenue streams and reduce our dependence on the existing business.

10 in 10 – 10 Questions in 10 Minutes With SGX-listed Companies

Designed to be a short read, 10 in 10 provides insights into SGX-listed companies through a series of 10 Q&As with management. Through these Q&As, management will discuss current business objectives, key revenue drivers as well as the industry landscape. Expect to find wide-ranging topics that go beyond usual company financials. This report contains factual commentary from the company’s management and is based on publicly announced information from the company. For more, visit sgx.com/research. For company information, visit www.kimheng.com.sg

Click here for the Annual Report 2020