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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST
BE READ IN CONJUNCTION WITH THE SECTION HEADING “WARNING” ON THE COVER OF THIS DOCUMENT.
BUSINESS OF THE TARGET GROUP
OVERVIEW
The Target Group principally engages in manufacturing and sale of varieties of
standardised and customised green precast concrete wall panel system and sale of related
accessories and building materials with headquarters in Singapore and production plant in
Johor Bahru, Malaysia. According to the Frost and Sullivan Report, the Target Group is the
leading precast hollow-core concrete wall panel provider in Singapore in terms of revenue and
has covered approximately 51.3% of the market share (in terms of revenue generated from both
domestic and export sales) in Singapore in 2020.
Precast concrete wall panel is considered as one of the building materials for green
buildings. Green building materials usually composed of renewable, sustainable and recycled
ingredients. The Target Group’s green light-weight precast concrete wall panels are primarily
manufactured from recycled materials including RCA and quarry dust, other materials
including cement and sand with minimum waste generated and have become an essential
construction material for green buildings. Apart from its wall panel system, the Target Group
also sells wall panel related accessories which are used in conjunction with the Target Group’s
precast wall panel systems at their installation and application. The Target Group also sells
lightweight expanded clay aggregate manufactured by its supplier to its customers.
As at the Latest Practicable Date, the Target Group has 3 automated production lines and
3 manual production yards in its production plant in Johor Bahru, Malaysia, and together with
its headquarters in Singapore, has 119 staff and workers.
At present, five series of products of the Target Group are with rating of leader (4 Ticks,
which is the highest rating) by SGBC, and the green precast concrete wall panel of the Target
Group is the only hollow-core lightweight concrete wall panel product certified with leader
(4 Ticks). The Target Group’s green precast concrete wall panels are also awarded with the
Singapore Green Label for “Eco-Friendly Building Material” by the Singapore Green Labelling
Scheme Secretariat since 2014. Also, the Target Group has been on the HDB’s list of material
suppliers since 2014. The Target Group’s production process was accredited with ISO
9001:2008, ISO 14001:2004 and ISO 45001:2018 certifications.
Since its inception in 2006, the Target Group has established a solid presence in the
Singapore and Malaysia markets and the Target Group mainly derives revenue from
manufacture and sale of green precast concrete wall panel system and related accessories and
building materials. To (i) further strengthen its market position and seek sustainable growth;
(ii) diversify its revenue stream; and (iii) reduce reliance on any single geographical market,
the Target Group commenced seeking opportunities to expand the geographical reach of its
products in 2017.
Having considered the substantial investment costs and capital commitments and
management attention required for setting up its own production plant(s) in new geographical
markets, the Target Group believes that expansion via the franchise model would enable the
Target Group to rapidly scale up its market presence without over-leveraging its capital for
building up new production plants and investing in new equipment and hence reducing its
financial and operational risks. As such, the Target Group commenced its franchise
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BUSINESS OF THE TARGET GROUP
arrangement in Batam, Indonesia in 2017. Currently, the Target Group has three franchise
arrangements covering Indonesia (Jakarta), Cambodia and the PRC whereby the Target Group
grants its franchisees the right to set up their own production plants for the manufacturing and
sales of precast concrete wall panel system and related accessories using the Target Group’s
operation methods, knowhow, registered patents and the trademark “ ” in the designated
franchised territories.
With the commencement of the franchise business whereby the Target Group’s
franchisees have/will set up their own production plants in the franchised territories, the Target
Group is able to refer to its franchisees such customers and/or projects procured by the Target
Group in the franchised territories and generates referral income.
Furthermore, in order to introduce the Target Group’s products and their application to
new customers in new markets, upon customer’s request, the Target Group provides its
customers with drawings and/or designs to demonstrate the installation of concrete precast wall
panels and recognises a design fee.
For the five years ended 31 December 2020 approximately 97.4%, 87.1%, 60.6%, 58.6%
and 71.8% of the Target Group’s total revenue was generated from Singapore, respectively, and
approximately 2.6%, 2.6%, 8.5%, 11.1% and 6.4% was generated from Malaysia, respectively.
In addition, approximately 10.3%, 25.6%, 30.3% and 3.0% of the Target Group’s total revenue
was generated from Indonesia for the year ended 31 December 2017, 2018, 2019 and 2020,
respectively and approximately 5.3% and 9.4% of the Target Group’s total revenue was
generated from Cambodia for the year ended 31 December 2018 and 2020, respectively. In
addition, approximately 9.4% of the Target Group’s total revenue was generated from the PRC
for the year ended 31 December 2020.
The Target Group’s total revenue for the five years ended 31 December 2020 was
approximately S$24.8 million, S$19.6 million, S$21.5 million, S$24.3 million and S$17.1
million, respectively. The Target Group’s net profit for the five years ended 31 December 2020
was approximately S$6.8 million, S$2.3 million, S$3.2 million, S$3.4 million and S$2.8
million, respectively. On the other hand, the Target Group recorded [REDACTED] expenses
which are the expenses relating to the Acquisition and the [REDACTED], and are substantially
non-recurring in nature of approximately S$[REDACTED], S$[REDACTED],
S$[REDACTED], S$[REDACTED] and S$[REDACTED] for the five years ended
31 December 2020, respectively. Without taking into account the [REDACTED] expenses, the
Target Group would record profit for the year of approximately S$8.1 million, S$4.3 million,
S$4.1 million, S$5.7 million and S$3.9 million for the five years ended 31 December 2020,
respectively. Please refer to the section headed “Financial Information of the Target Group –
Results of Operations – Non-IFRS measures” in this document for further details.
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BUSINESS OF THE TARGET GROUP
To improve the Target Group’s financial performance going forward, the Target Group
will continue to (a) enhance its leading position in the Singapore market by attracting its
potential customers to use the Target Group’s precast wall panel systems instead of AAC
panels; (b) penetrate into the Malaysia and Southeast Asia markets where it is expected that
market demand for precast wall panels will increase with the increased adoption of precast wall
panels in line with the rising trend of green building construction; (c) expand its production
capacity to cope with the growth in Malaysia and other Southeast Asia markets; (d) strengthen
its sales network and diversify customer base; (e) enhance its range of product offering; and
(f) adopt a prudent financial management policy to control its operating costs. Furthermore, the
Target Group will continue to further develop its franchise model and enter into more franchise
arrangements with potential local market players. The Target Group will also continue to refer
to its franchisees such new customers and/or projects procured by the Target Group in the
franchised territories and generate referral income. Please refer to the paragraph headed
“Business Objectives, Strategies and Future Plans” below for further details.
The Target Group recorded accumulated losses as at 1 January 2014, which were
primarily attributable to losses incurred prior to the relocation of the Target Group’s
manufacturing operation from Singapore to Malaysia in 2012.
Prior to the relocation, the financial performance of the Target Group was affected (and
limited) by its then existing scale of operation in Singapore, which to the best knowledge of
the proposed Directors, only has a maximum annual production capacity of approximately
624,000 m 2 and an actual production volume of 500,000 m 2 for the year ended 31 December
2011. With limited scale of operation at that time, the Target Group was unable to generate
sufficient sales to cover its then operating costs, thus recording losses from its operations.
Recognising the limitations associated with the lack of production scale, the Investors
decided to relocate the Target Group’s manufacturing operation to Malaysia in 2012, following
which continuous investments/expenses were required to fine-tune and expand the then new
manufacturing plant in Malaysia, thus affecting the financial performance of the Target Group
in 2013.
Notwithstanding the initial losses incurred, with the completion of installation of
additional production lines, the Target Group’s operating scale has expanded after the
relocation. The Target Group’s annual production capacity increased from approximately 0.9
million m 2 in 2014 to approximately 1.7 million m2 in 2018. Furthermore, with the continuous
capital investment, the Target Group’s first automated production line commenced production
in September 2013 with three manual production yards commenced production in 2014 and two
more automated production lines commenced production in 2016 and 2017, respectively, which
in turn, improved the production capacity and operating efficiency. Hence, the Target Group’s
actual production volume also increased from approximately 0.7 million m 2 in 2014 to
approximately 1.1 million m 2, 1.2 million m 2, 1.0 million m 2, 1.1 million m 2 and
1.1 million m 2 in 2015, 2016, 2017, 2018 and 2019, respectively. Despite a temporary
suspension of the Target Group’s Malaysia production plant from mid-March to May 2020
where production only resumed to normal level in September 2020, the Target Group was still
able to produce approximately 0.7 million m 2 precast concrete wall panels in 2020.
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BUSINESS OF THE TARGET GROUP
The increase in production capacity and operating efficiency enabled the Target Group to
take up more projects and larger orders with its growing track record. Coupled with the
receiving of further qualifications and certifications during the Track Record Period, such as
the Material Supplier (HDB Approved) qualification in July 2014 and the Excellence Rating (3
Ticks) Certificate under Precast Heading in March 2016 and the Leader Rating (4 Ticks) in
April 2018, the Target Group was able to generate significantly improved sales from 2014
onwards, and the Target Group’s eventually becomes the leading precast hollow-core concrete
wall panel provider in Singapore in terms of revenue.
Such growth in revenue, coupled with the decrease in the monthly costs of labour from
approximately S$1,000 (unaudited) in 2011 to approximately S$637 in 2020, also translated to
the improvement in financial performance of the Target Group when comparing with that prior
to 1 January 2014.
COMPETITIVE STRENGTHS
The proposed Directors believe that the Target Group’s competitive strengths set out
below have driven growth in its business and financial performance.
Leading green precast hollow-core concrete wall panel system provider in Singapore with
an established track record
According to the Frost and Sullivan Report, the Target Group is the leading precast
hollow-core concrete wall panel provider in Singapore in 2020 in terms of revenue and it has
approximately 51.3% of the market share (in terms of revenue generated from both domestic
and export sales) in Singapore in 2020.
During the Track Record Period, the Target Group has supplied its precast concrete wall
panel system to various main contractors and sub-contractors for over 750 completed
commercial, industrial, residential and institution building construction projects in Singapore,
Malaysia and Indonesia, etc. As at the Latest Practicable Date, the Target Group’s precast
concrete wall panel system were used in 183 on-going building construction projects.
The Target Group’s track record in its technological leadership and expertise in the
industry is also reflected from its accreditations and awards as set out in the paragraph headed
“Qualifications, Licences and Certifications” below. At present, five series of products of the
Target Group are with rating of leader (4 Ticks, which is the highest rating) by SGBC, and the
green precast concrete wall panel of the Target Group is the only hollow-core lightweight
concrete wall panel product certified with leader (4 Ticks), after passing SGBC’s all-round
assessment on, among other things, the products’ quality, strength, content and carbon
footprint, as well as being able to demonstrate its track record and production process had met
the required standards in respect of production volume, waste and environmental management
and quality control. The Target Group’s precast concrete wall panel system was also awarded
the Singapore Green Label for “Eco-Friendly Building Material” by the Singapore Green
Labelling Scheme Secretariat since 2014. The Target Group is also on the HDB’s list of
material suppliers, which means that the Target Group’s wall panel system has met the HDB’s
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BUSINESS OF THE TARGET GROUP
requirements and can be used in projects undertaken by HDB. The Target Group’s production
process was accredited with ISO 9001:2008, ISO 14001:2004 and ISO 45001:2018
certifications, which certified the Target Group’s contribution to sustainable development and
environmental preservation.
Well positioned to capture the growth opportunities in green buildings in Singapore and
Malaysia
The Target Group is engaged in manufacturing of green precast concrete wall panels, a
type of concrete manufactured from recycled waste and sustainable materials and one of the
essential construction materials for green buildings. Green buildings are buildings constructed
using processes that are resource-efficient with environment-friendly features. The Target
Group’s history can be traced back to 2006 and can be considered as a market pioneer after the
Singapore Government first rolled out its green building movement in 2005. Approximately
97.4%, 87.1%, 60.6%, 58.6% and 71.8% of the Target Group’s revenue was generated from the
Singapore market for the five years ended 31 December 2020, respectively.
The Singapore Government has demonstrated great commitment by rolling out a
comprehensive suite of green initiatives and policies, among which development of green
buildings is one of the top on the agenda. Since 2005, the Singapore Government has begun
the green building movement and has launched three Green Building Masterplans in 2005,
2009 and 2014 respectively, with an aim to have at least 80% of the buildings in Singapore to
be green by 2030.
According to the Third Green Building Masterplan issued by BCA in 2014, it is the
Singapore Government’s intention to rationalise and tighten the standards to mandate a
structured approach towards adoption of green materials for building projects. BCA has
adopted the BCA Green Mark Scheme, a green building rating system to evaluate a building
for its environmental impact and performance. By using the Target Group’s green precast
concrete wall panel system, property developers’ construction projects can score higher points
under both the BCA’s Buildability Score and the BCA Green Mark appraisal system than using
traditional building materials such as bricks and blocks. According to BCA, the number of
Green Mark building project has seen significant growth from around 732 in 2010 to over
3,500 in 2020 with a total gross floor area of over 115 million m2. According to Frost &
Sullivan, as of end of 2020, more than 41% of building projects’ Gross Floor Areas in
Singapore have met the green buildings standards.
According to the Frost and Sullivan Report, with the Singapore Government’s green
policy and increasing focus on sustainable development, increasing number of property
developers, consultants and construction companies design and build their buildings with
sustainability, the environmental and safety and health concepts. This encourages the use and
promote the sales of green building materials and encourages manufacturers to innovate
greener building materials. Also, the application of precast concrete panels in Singapore had
seen a significant growth these years.
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BUSINESS OF THE TARGET GROUP
On the other hand, there was also increasing adoption of IBS in both public and private
sectors in Malaysia. According to the MIDA, 70% of target public projects with value of RM10
million and above achieved IBS score of 70 while only 15% of target private projects scored
50 in IBS score, as at October 2018. CIDB has put a great effort to promote the IBS application
in building construction, mainly through training and incentives programme, resulting in
higher usage of precast materials including precast concrete panels. For instance, to enhance
the IBS adoption rate, MIDA has put forward encouragement policy in January 2021.
According to MIDA, companies that produce at least three basic components of IBS or IBS
systems that use at least three basic IBS components are eligible for the incentive tax allowance
of 60% on qualifying capital expenditure incurred within five years, which can be set off
against 70% of statutory income for each year of assessment. The encouragement policy will
contribute to higher usage of precast materials including precast concrete panels. Besides, the
Green Building Index, a rating system to assess the environmental design and performance of
buildings in Malaysia, was also developed with an aim to promote green buildings in Malaysia.
Accelerated Capital Allowance (ACA) and IBS Promotion Fund are also offered by LHDN and
SME Bank respectively to support the purchase of fixed assets including equipment for
manufacturing of IBS. This encourages the use of green building materials to improve energy
efficiency.
The proposed Directors believe that the Target Group is well positioned to capture the
growth opportunities in the green building markets in Singapore and Malaysia as the business
model of the Target Group perfectly aligned with the governments’ policies as the Target
Group’s green precast concrete wall panel system are sustainable green building materials and
require little or no maintenance and recyclable at the end of their use. The Target Group will
hence be benefited from the immense business opportunities brought about by such green
building movement in both Singapore and Malaysia with the unwavering governmental
supports.
Benefited from the Singapore/Malaysia cross-border advantages and convenient
transportation network
For the five years ended 31 December 2020, approximately 97.4%, 87.1%, 60.6%, 58.6%
and 71.8% of the Target Group’s revenue was generated from the Singapore market,
respectively, while the Target Group’s production plant is located at Johor Bahru, Malaysia,
which is just 30 km from the Malaysia-Singapore border. The Target Group’s customers and
suppliers can conveniently access to Target Group’s production plant by road.
The map below illustrates the approximate location of Singapore, where the Target
Group’s headquarters is located and most of the Target Group’s revenue are generated, and the
Target Group’s production plant in Johor Bahru, Malaysia.
Senai
Production Plant
Ayer Tawar
Skudai
ud
d JOHOR
o h or River
Pasir Gudang
J
Tekong Island
SINGAPORE CHANGI
Headquarters
it
tra
Johor S
TUAS DOWNTOWN
CORE
Jurong Island
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BUSINESS OF THE TARGET GROUP
Johor Bahru is the chief gateway between Malaysia and Singapore. The transportation
network in Johor Bahru was further expanded over the past few years with the Iskandar Coastal
Highway, the Eastern Dispersal Link and the Senai-Pasir Gudang-Desaru Highway has
significantly reduced journey times to and from Johor Bahru and Singapore. The Target Group
shifted its manufacturing operation to Malaysia from Singapore in 2012. The Target Group
takes the advantage of Malaysia’s comparatively lower costs of labour, utilities and land values
but also makes itself easily to access the Singapore market which generally the Target Group’s
wall panel can be sold at a higher price hence to enjoy a higher profit margin.
Further, the Target Group was entitled to various tax reliefs and incentive in Singapore
and Malaysia, including but not limited to the Productivity and Innovation Credit (PIC)
Scheme in Singapore and incentive offered by MIDA in Malaysia during the Track Record
Period, details of which are set out in the section headed “Financial Information of the Target
Group – Principal Components of Results of Operations – Income tax” in this document.
Well-established long-term relationship with customers, suppliers and authorities
Through the provision of consistently high quality products and after sales services, the
Target Group has established a strong and diversified customer base with over 300 customers
during the Track Record Period and has become one of the key suppliers of precast concrete
wall panels of some of its customers while many of them are repeated customers. As a market
leader of the precast hollow-core concrete wall panel industry, the Target Group is well-known
to the construction industry market players including property developers, architects and
consultants, main contractors and sub-contractors in Singapore, some of whom the Target
Group have had a business relationship with for up to 10 years. The Target Group has
developed an extensive procurement network by leveraging on its experience in the industry
and building long-term business relationship with suppliers. The Target Group has worked with
its key suppliers of principal raw materials for more than three years. In addition, the Target
Group works closely with the authorities in Singapore and Malaysia. In Singapore, the Target
Group was invited by SGBC to participate in various industry branding and marketing events
and activities and consultation programme, as well as to demonstrate its products to various
authorities including BCA. In Malaysia, the Target Group was invited by CIDB to participate
in the publication of handbook and to organise various training programmes and workshops in
relation to the installation of IBS and the establishment of the relevant national occupational
skill standard.
The capability to customise products to fit customers’ specific needs and requirements
The Target Group is able to differentiate itself from its competitors by providing not only
a single standard size of concrete wall panel but providing customised precast concrete wall
panel with different specifications, including but not limited to the length, number and
diameter of hollow cores, as well as technical solutions to address its customers’ specific needs
and requirements. The Target Group is the only green precast concrete wall panel provider in
Singapore able to customise the length of the precast concrete wall panels to up to 6.5 metres
long to the best knowledge of the proposed Directors. The customised wall panels are ready to
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BUSINESS OF THE TARGET GROUP
form walls in accordance with the consultant’s designs, hence saving customers’ time and
labour spent at the construction sites and enhancing installation and operational efficiency.
Generally both commercial and industrial buildings are designed with higher ceiling and height
hence require more long customised wall panels to be used as vertical walls.
The proposed Directors believe that the Target Group’s capabilities in customisation shall
provide greater flexibility in terms of the construction works’ design and shall enhance the
efficiency of construction and the same have contributed to the Target Group’s reputation and
track record.
Technological innovation and research and development capabilities
The Target Group has been dedicated to the research and development of green and
recycled materials for buildings and constructions since its incorporation. The Target Group
places significant emphasis on research and development to keep pace with the technological
developments in the building and construction material industry as well as to defend its
competitive position. With a minimum of 30% recycled material in its content, five series of
products of the Target Group are with rating of leader (4 Ticks, which is the highest rating) by
SGBC, and the green precast concrete wall panel of the Target Group is the only hollow-core
lightweight concrete wall panel product certified with leader (4 Ticks). The Target Group’s
green precast concrete wall panels are also accredited as a Singapore Green Label product as
an “Eco-Friendly Building Material”.
The Target Group has established its research and development team with an aim to
enhance its ability to offer innovative and effective solutions to meet evolving market
demands. The Target Group’s research and development department comprised of 6 and 2
technical staff based in Malaysia and in Singapore respectively as at the Latest Practicable
Date. Four of the technicians focus on research and development projects and a majority of
them hold qualifications at college degree or above. Through its continuous research and
development efforts, as at the Latest Practicable Date, the Target Group had 2 registered
designs in Singapore, one registered patent in the United States of America and was applying
for the registration of 2 patents in Malaysia and Indonesia. During the Track Record Period,
the Target Group cooperated with an European institution to develop light-weight aggregate
materials to be used in its production as well as to develop possible new concrete wall products.
Moreover, since September 2020, the Target Group has engaged an independent consultant to
provide consultancy services on the research and development of product enhancement and
development. To achieve the aforementioned aim, the Target Group has incurred approximately
S$137,000, S$184,000, S$142,000, S$166,000 and S$311,000 for the five years ended 31
December 2020, respectively, and it is expected that the Target Group will allocate no less than
S$800,000 for the year ending 31 December 2021.
The Target Group’s green precast concrete wall panel system has proven to be lighter in
weight, create less waste and more efficient to install, but at the same time offers better or
similar level of strength and robustness as compared to traditional construction materials. The
Target Group’s precast concrete wall panel scores 0.85 for the Labour Saving Index, which is
a component for calculating the buildable design score of the wall system under the Code of
Practice on Buildability issued by BCA. The brick wall scores as low as zero for the Labour
Saving Index, and attracts demerit points in calculating the overall buildable design score of
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the wall system. The proposed Directors believe that the technologies the Target Group
possesses enable it to differentiate its products from competitors’ products in terms of
performance and operation and cost efficiency and hence stand ahead of its competitors in the
market.
Well-designed processing flow with an experienced and cost effective workforce
The Target Group has strived for continuous optimisation in its 3 automated production
lines and 3 manual production yards and has continuously fine-tuning its manufacturing and
processing flow of its production plant to maximise the utilisation and effectiveness of
machineries and labour force. The result of the Target Group’s contribution and dedication was
proven by its certification of ISO 9001:2008 for its improvement in its production plant’s
efficiency of manufacturing as well as the quality and safety of its concrete wall panels.
The Target Group also believes in investing in its people. Apart from its effort in
attracting and retaining capable personnel, particularly experienced technicians familiar with
the production processes, the Target Group has also established a comprehensive training
programme to keep the workforce properly skilled.
Dedicated and experienced management team
The senior management team of the Target Group has extensive management and
operational experience in the business of property development, construction and building
materials. The Target Group’s experienced management team under the leadership of its
founder and a proposed executive Director, Mr. Widjaja, who has led the Target Group through
rapid growth and expansion since its establishment in 2006. Mr. Widjaja has over 20 years of
experience in distribution and international trading with companies in Southeast Asia and has
established a number of companies in the field of manufacturing, distribution and construction
development. Ms. Lim and Ms. Limarto, both proposed executive Directors, have joined the
Target Group for over 15 years and 10 years respectively. Mr. Ng Eng Hong, a proposed
executive Director and the technical director, has over 20 years of experience in the
construction industry and had worked with a regional property developer in Singapore. Mr.
Wong Tang Thomas, a proposed chief risk officer has around 20 years of experience in the
banking industry with a focus in risk management and control. Please refer to the section
headed “Directors and Senior Management of the Enlarged Group” in this document for details
of the Target Group’s directors and senior management team.
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BUSINESS OBJECTIVES, STRATEGIES AND FUTURE PLANS
The Target Group intends to continue strengthening its leading market position in
Singapore with enhanced production facilities in Malaysia, as well as expanding its business
in Malaysia and other countries in Southeast Asia by implementing the following strategies:
Enhance leading position in existing Singapore market and to penetrate into the Malaysia
and Southeast Asia markets
Being the market leader in the hollow-core concrete wall panel industry with significant
presence in Singapore, the Target Group can leverage on its position and experience to
capitalise on the immense business opportunities arising from the development of green
buildings in the region. The outlook of green building and construction material industry in the
region remains strong, on the back of government initiatives and policies in promoting and
accelerating the pace of developing green cities.
The Target Group will leverage on its successful experience in Singapore and will aim to
expand its business to other regional markets in Southeast Asia, such as Indonesia, in particular
increase its market share in Malaysia with a primary focus on the Johor Bahru, Kuala Lumpur
and Indonesia markets.
According to the Frost and Sullivan Report, from 2015 to 2020, the GDP per capita of
Malaysia has been growing steadily. The nominal GDP of Malaysia has increased from
RM1,176.9 billion in 2015 to RM1,415.2 billion in 2020, representing a CAGR of 3.8%.
Malaysia had demonstrated a steady growth in population from 31.2 million in 2015 to 32.9
million in 2020 and it is forecasted that population will continue to grow, leading to a growing
domestic demand in various industries. The total value of construction work done in Malaysia
has recorded a significant growth from RM114,943 million in 2015 to RM146,370 million in
2019 where due to the outbreak of COVID-19, the total value of construction work done in
Malaysia declined to RM117,918 million in 2020. Between 2015 and 2020, construction work
done for civil engineering revealed the highest growth which indicating the strong demand for
precast concrete panel in Malaysia.
Likewise, according to the Frost and Sullivan Report, Indonesia is on the rising trend of
green building construction since the establishment of Indonesia Green Building Council and
also the Greenship rating system. Certain tax allowance and incentives are offered for the
development of green building and business areas that contribute to environmental
preservation. The Indonesia market of precast concrete wall panels by value grew significantly
from IDR5,563.6 billion in 2015 to IDR8,611.6 billion in 2020, representing a CAGR of 9.1%.
Frost & Sullivan forecasts that the Indonesia market will grow at a CAGR of 12.4%, reaching
IDR14,330.9 billion in 2025.
The proposed Directors expect to conduct more business in other regional markets in
Southeast Asia (excluding Singapore), such as the Malaysia and Indonesia markets in the next
12 months.
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The Target Group will gradually increase the production capabilities, strengthen its sales
network and enhance its presence in Malaysia in the future to meet the demand driven by the
growth in Malaysia and Indonesia markets. Also, the Target Group will continue to focus on
manufacturing and sales of high quality products which cater for customers’ specific
requirements and needs to differentiate itself from competitors, and strive to enhance its
pre-sales service, logistics and after-sales services.
Expand the production capacity to cope with the growth in Malaysia and other Southeast
Asia markets
The annual production capacity of the Target Group’s production plant for the year ended
31 December 2020 is approximately 1.7 million sq.m. and its average utilisation rate for the
five years ended 31 December 2020 was approximately 87.6%, 61.8%, 68.2%, 66.8% and
42.5%, respectively. The substantially low utilisation rate of approximately 42.5% for the year
ended 31 December 2020 was primarily due to the temporary suspension of the Target Group’s
production plant from mid-March to May 2020 as a result of the outbreak of COVID-19 and
the production has only gradually resumed since June 2020 and has resumed to the normal level
since September 2020 where the monthly utilisation rate ranged from approximately 58.4% to
62.0% in September to December 2020. To meet the growing demand arising from both the
existing and new markets in particular the expected growth in revenue generated from the
Malaysia and other Southeast Asia markets in the next 12 months and to better position itself
in the market with the Target Group’s newly introduced precast concrete wall panel system
which are lighter and have higher fire-proofing performance, the Target Group will seek to
increase its production capacity and enhance its production efficiency to cater for the
production of the new products which entails the use of a design concrete mix which is distinct
to the Target Group’s other lines of products. The Target Group has acquired a parcel of land
near its existing production plant in Johor Bahru, Malaysia in February 2017 for which the
Target Group intends to streamline the production process of its existing production plant by
adding and relocating the equipment and machinery for the production of new products to the
new parcel of land, while 2 new production yards with new machineries and equipment are
intended to be added to the existing production plant with an aim to increase the maximum
annual capacity to approximately 1.9 million sq.m. and to segregate the production processes
of the new products from other lines of products. It is expected that the expansion plan will be
completed by the second half of 2021 with an estimated budget of RM15 million (equivalent
to approximately S$4.9 million translated at the exchange rate of S$1:RM3.04), which is
funded by the Target Group’s internal funding, bank borrowings and, if necessary, potential
future fund raising activities. To fund the expansion plan, the Target Group obtained a S$5.7
million 15-year term loan from a bank in Singapore which carries an interest rate of 1.1% per
annum above the lending bank’s cost of funds for interest period of one month. As at the Latest
Practicable Date, over 99% of the term loan has been drawn down.
Expand the geographical reach via franchising arrangements and referral arrangement
To (i) further strengthen its market position and seek sustainable growth; (ii) diversify its
revenue stream; and (iii) reduce reliance on any single geographical market, the Target Group
commenced seeking opportunities to expand the geographical reach of its products in 2017.
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BUSINESS OF THE TARGET GROUP
As Mr. Widjaja and Ms. Lim, the Target Group’s founders, and Ms. Limarto, who is
responsible for the Target Group’s sales and marketing, are Indonesian, the Target Group hence
decided to first expand into the Indonesia market and then to other Southeast Asia markets. In
2017 and 2018, the Target Group began to sell its products to customers in Indonesia and
Cambodia, respectively.
Indonesia is a country with enormous geographical coverage which has a total land area
of approximately 1,905,000 km2 and extends about 5,120 km from east to west and about
1,760 km from north to south. Given the transportation difficulties associated with the panels
manufactured due to their large size and weight (and hence involved high transportation costs),
the geographical reach of the Target Group’s existing production plant is limited and is
generally expected to serve its immediate neighbouring areas (via land within a radius of 100
km) in order to operate in a cost-effective manner (and hence enable the Target Group to set
a competitive price for its products).
Having considered the substantial investment costs and capital commitments and
management attention required for setting up its own production plant(s) in new geographical
markets, the Target Group believes that expansion via the franchise model would enable the
Target Group to rapidly scale up its market presence without over-leveraging its capital for
building up new production plants and investing in new equipment and hence reducing its
financial and operational risks. As such, the Target Group commenced its franchise
arrangement in Batam, Indonesia in 2017. Currently, the Target Group has three franchise
arrangements covering Indonesia (Jakarta), Cambodia and the PRC whereby the Target Group
grants its franchisees the right to set up their own production plants for the manufacturing and
sales of precast concrete wall panel system and related accessories using the Target Group’s
operation methods, knowhow, registered patents and the trademark “ ” in the designated
franchised territories.
With the commencement of the franchise business whereby the Target Group’s
franchisees have/will set up their own production plants in the franchised territories, the Target
Group is able to refer to its franchisees such customers and/or projects procured by the Target
Group in the franchised territories and generates referral income. In this regard, the Target
Group entered into a one-year master referral agreement with Franchisee B in April 2020,
which has been extended to last until 14 October 2021 (i.e. the expiry of the initial 2-year term
of the Franchise Agreement (Jakarta)), and provisions relating to referral arrangements have
been included in the Franchise Agreement (Cambodia) and the Franchise Agreement (PRC) and
the same would be included in all future franchise agreements.
In November 2020, JOE Green MKT Singapore entered into the MOU with the Proposed
Franchisee in relation to the proposed appointment of the Proposed Franchisee as the Target
Group’s new franchisee in Indonesia. It is currently expected that definitive agreement for the
Proposed Franchise Arrangement will be entered into on or before 1 August 2021 and the
Proposed Franchise Arrangement is expected to commence in the second half of 2021. Apart
from Indonesia, the Target Group intends to, via the business connections of the Target Group’s
business partners, explore franchise opportunities in nearby Asia territories. In formulating its
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BUSINESS OF THE TARGET GROUP
expansion plan, the Target Group will take into account factors such as expected market
demand and growth, degree of competition, availability of substitutes, entry barriers and
applicable rules and regulations governing franchise arrangements. Going forward, the Target
Group will continue to further expand its business into new geographical markets via the
franchise model and select its franchisees based on a number of criteria, including, among
others, its local knowledge and experience in the industry, network, financial resources,
reputation and location.
The Target Group generated franchise related income of approximately S$4.3 million and
S$3.7 million for the year ended 31 December 2019 and 2020, representing approximately
17.6% and 21.8% of the Target Group’s total revenue for the respective year, respectively. For
the year ended 31 December 2019, the Target Group recognised referral income of S$2.4
million, representing approximately 9.9% of the Target Group’s total revenue for that year.
Please refer to the paragraph headed “Franchise Arrangements and Referral Arrangement”
in this section for further information on the franchise arrangements and referral arrangement.
Continue to strengthen sales and market strategies and to diversify customer base
As mentioned above, the Target Group aims to expand its business and presence to other
regional markets following its successful experience in Singapore.
The Target Group intends to strengthen its sales network by building on the closer
relationship with property developers, consultants and its key existing customers including
main contractors and sub-contractors which have presence in both Singapore and Malaysia, as
well as expanding and developing new customer base in the regional market, in particular
focusing primarily on the Johor Bahru and Kuala Lumpur markets. To do so, the Target Group
collaborated with CIDB and other market players for various training programmes and
workshops in relation to the installation of IBS and participated in the establishment of the
relevant national occupational skill standard and preparation of the relevant handbook. The
proposed Directors believe that the said cooperation with CIDB and other market players in the
region will significantly enhance the presence of the Target Group in Malaysia.
In addition, the Target Group also puts much emphasis on sales and marketing strategies,
such as company website, product brochures and industry conventions seminars and marketing
events. The Target Group will continue to invest in its in-house marketing team by recruiting
additional sales personnel who will be based in Johor Bahru and providing professional
training courses to the Target Group’s customers or potential customers.
The Target Group will also consider forming strategic alliances with property developers
in the region to gain access to new markets for its products as well as to work closely with the
government authority, organisations, consultants, academia and representatives from the
building industry with an aim to promote green and sustainable buildings in the region.
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BUSINESS OF THE TARGET GROUP
Product innovation and enhancement for offering a wider range of wall panels related
accessories to customers
The Target Group anticipates its customers’ needs and has introduced new wall panel
related accessories including Acryshield, Crackshield and Flexshield. The Target Group is also
in the course of exploring opportunities to cooperate with overseas institutions to further
enhance the Target Group’s wall panel system as well as developing new wall panel related
accessories, materials and equipment. The Target Group will endeavour to include more wall
panel related accessories, including new tools, additives and chemicals that can enhance the
performance of the wall panel system or can enhance the efficiency of the installation of the
wall panels, in its portfolio to capture more business opportunities.
The Target Group is exploring on the possibility of using new raw materials or new
formula, for example, using lightweight recycled aggregate and a lower content of cement in
its formula and hence to make its products lighter and greener, which will in turn reduce the
cost of production and the cost of transportation. The Target Group will look at selective
additions to further expand the Target Group’s range of products to serve a larger variety of
customers. In particular, since September 2020, the Target Group has engaged an independent
consultant to provide consultancy services on the research and development of product
enhancement and development. In this connection, the Target Group has incurred
approximately S$137,000, S$184,000, S$142,000, S$166,000 and S$311,000 for the five years
ended 31 December 2020, respectively, and is expected to allocate no less than S$800,000 in
the year ending 31 December 2021 as expenses, including but not limited to the relevant staff
costs, professional fees, test laboratory fees associated and investment in laboratory
equipment.
Further enhance operational efficiency and reduce production costs
In order to ensure long-term competitiveness, the Target Group has implemented a
number of measures to improve its operational efficiency and cost-control, such as investing
in research and development to optimise the production processes, upgrading machineries and
equipment and increase production automation at the Target Group’s production process, with
an aim to reduce cost of production and enhance the quality of products.
The management team works closely with sales & marketing department, technical
department, production department and research & development department on an ongoing
basis with a view to improving production efficiency as well as products quality. In particular,
supervisory and testing are carried out at various stages of the whole production process in
order to identify areas for potential enhancement and improvement. Moreover, the Target
Group will continue to improve its operational efficiency and production process by providing
regular training to production staff, as well as to innovate cost cutting measures. For instance,
the Target Group had recently adopted the enterprise resource planning software system in its
sales and production control and management system, further extension would be
implementation of warehousing management system using automatic updating with
QR/barcoding and scanner system to assist in inventory and logistics management. The Target
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BUSINESS OF THE TARGET GROUP
Group has also appointed a consultant to evaluate (i) the technical feasibility to automate part
of its production process; (ii) the cost of developing and deploying both the hardware and the
software for automation; and (iii) the potential cost reduction arising from production
automation. The initial observation of the consultant is promising and the Target Group expects
that by automating the production of the Target Group, the gross profit margin can be enhanced
as the manpower required for production could be reduced.
BUSINESS MODEL
Manufacture and sale of precast concrete wall panel systems
The diagram below illustrates the business model, sales cycle and the time-line of the
Target Group:
Sales Cycle Cycle Time
The Target Group negotiates contract terms
(including price and total quantity) with customer
The Target Group enters into
master sales contract with customer
Customer submits purchase order(s) to the Target Group generally two weeks to
stating product specifications and quantities one month in advance
The Target Group commences production
The Target Group provides technical support and
consultation services in relation to the application and
installation of the wall panel system
The Target Group arranges delivery of the wall panels
to the customer’s construction site
The Target Group provides after-sale services
(including provision of technical services and,
if necessary, replacement of defective products)
｝
generally
7-14 days
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BUSINESS OF THE TARGET GROUP
Manufacture and sale of green precast concrete wall panel system and the sale of wall
panel system accessories have been the main sources of revenue of the Target Group
throughout the Track Record Period. The Target Group has begun to extend its geographical
reach to markets outside Singapore and Malaysia since 2017 and has generated revenue from
Indonesia and Cambodia markets since 2017 and 2018, respectively. In order to introduce the
Target Group’s products and their application to new customers in new markets, upon
customer’s request, the Target Group provides its customers with drawings and/or designs to
demonstrate the installation of concrete precast wall panels and recognises a design fee.
Business expansion via franchise arrangements
To (i) further strengthen its market position and seek sustainable growth; (ii) diversify its
revenue stream; and (iii) reduce reliance on any single geographical market, the Target Group
commenced seeking opportunities to expand the geographical reach of its products in 2017.
Having considered the substantial investment costs and capital commitments and
management attention required for setting up its own production plant(s) in new geographical
markets, the Target Group believes that expansion via the franchise model would enable the
Target Group to rapidly scale up its market presence without over-leveraging its capital for
building up new production plants and investing in new equipment and hence reducing its
financial and operational risks. As such, the Target Group commenced its franchise
arrangement in Batam, Indonesia in 2017. Currently, the Target Group has three franchise
arrangements covering Indonesia (Jakarta), Cambodia and the PRC whereby the Target Group
grants its franchisees the right to set up their own production plants for the manufacturing and
sales of precast concrete wall panel system and related accessories using the Target Group’s
operation methods, knowhow, registered patents and the trademark “ ” in the designated
franchised territories.
With the commencement of the franchise business whereby the Target Group’s
franchisees have/will set up their own production plants in the franchised territories, the Target
Group is able to refer to its franchisees such customers and/or projects procured by the Target
Group in the franchised territories and generates referral income.
Please refer to the paragraph headed “Franchise arrangements and referral arrangement”
in this section for further details relating to the Target Group’s franchise arrangements and
referral arrangement.
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BUSINESS OF THE TARGET GROUP
PRODUCTS AND BRANDS
The Target Group’s principal products are green light-weight precast concrete wall panel
system for building construction projects, which are sold under the “JOE Green” brand. The
Target Group’s precast concrete wall panels are environmentally friendly and sustainable
building materials which are durable, light-weight, require little or no maintenance and
recyclable at the end of their use, and were accredited as Singapore Green Label product and
were awarded the Singapore Green Label for “Eco-Friendly Building Material”. By using the
Target Group’s wall panel system instead of traditional building materials, developers’
construction project can score higher points under both the BCA’s Buildability Score and the
BCA Green Mark appraisal system in Singapore.
Set out below are the Target Group’s principal products:
A. Green precast concrete wall panel system:
• Standardised precast concrete wall panel
• Customised precast concrete wall panel
• L-Joint and T-Joint
B. Wall panel system accessories and building materials:
• Joint Bonding Adhesive
• PU Foam Adhesive
• Flexshield
• Acryshield
• Crackshield
• L Bracket, Sleeve Anchor and Stoppercap
• Lightweight expanded clay aggregate
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BUSINESS OF THE TARGET GROUP
A. Green precast concrete wall panel system
The Target Group’s precast concrete wall panels are lightweight concrete product
manufactured primarily from recycled materials including (i) RCA, which is produced from
in-house crushing of hardcore waste materials recycled from the demolition of old buildings
and construction waste concrete material and waste from building materials manufacturers, as
well as wastes recycled from production by the Target Group; and (ii) quarry dusts; and other
materials including cement and sand. As over 30% of the content of the Target Group’s precast
concrete wall panels are manufactured from recycled material, and given that they are precast
panels, less procedures are needed for installation and application as compared to traditional
construction materials such as bricks and blocks, the Target Group’s precast concrete wall
panels reduce carbon-dioxide emissions during the construction.
The Target Group’s precast concrete wall panel system can be used as horizontal and
vertical internal walls, external walls and parapet walls. The Target Group’s precast concrete
wall panels simultaneously provide structure, thermal and sound insulation, and resistance to
fire and impact. The Target Group’s precast concrete wall panel system can also be used in wet
area and direct tiling can be applied to the wall panel system, given its low water absorption
nature.
The Target Group manufactures both standardised and customised precast concrete wall
panel system with different specifications and functions subject to the customers’ specific
needs and functional requirements. For example, the Target Group may in accordance with its
customers’ requirements to adjust length of the precast concrete wall panels, strengthen the
wall panels by reinforcing them with wires, and adjust the diameter and number of the
hollow-cores of the wall panels.
The Target Group’s precast concrete wall panel system offers its customers a cost-
effective solution. As compared to traditional building materials, in light of their lightweight,
hollow-core and precast nature, the Target Group’s precast concrete wall panels save
transportation costs, save time and labour spent at the construction sites and enhance
installation and operational efficiency for its customers. Besides, as the Target Group is able
to customise the length of its precast concrete wall panels to up to 6.5 metres long, time and
labour spent can be further reduced at the construction sites and at the same time allowing the
architects and engineers greater flexibility for their designs. Under the BCA’s mandatory
buildability framework, the Target Group’s precast concrete wall panel scores 0.85 for the
Labour Saving Index while the brick wall scores as low as zero for the Labour Saving Index.
Standardised precast concrete wall panel
The Target Group’s standard precast concrete wall panels are standardised to 600mm wide
with different thicknesses (ranged from 70mm to 200mm), without wire, and are 3 metres or
3.3 metres long.
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