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mr funny
20-10-06, 18:16
Singapore Companies
Published October 19, 2006

BBR turns to property development


SINGAPORE construction firm BBR Holdings Ltd said it expects a recovery in the real estate sector to underpin its profits in the next five to seven years, particularly as it branches out into property development.

Chief executive Andrew Tan said he is 'bullish' on prospects for the construction industry due to Singapore's strong economic growth, its plans to build two casinos, and the redevelopment of some of its central, low-rise apartments into taller, more lucrative buildings.

BBR shares have risen about 83 per cent in the past six months, making them the third-best performer in the All Singapore Index and the second best performer in the Construction Index after construction firm Sim Lian Group.

'Now, we see that the ingredients necessary for a vibrant construction industry are all in place,' Mr Tan said. He said BBR is moving into property development, securing tenders for prime property sites in Singapore and developing them into luxury homes.

He expects 40 per cent of BBR's revenues to be derived from this sector within five years. 'Since we have our own in-house specialist and general contracting work, we feel we'll be able to carve a niche market in this boutique development sector.'

On July 25, BBR said it acquired a 1,443 square metre freehold site in the Nassim Hill area for S$17.4 million. Mr Tan said the firm would build luxury apartments on the plot.

The company, founded in 1993 as a structural engineering specialist, was best known for its bridge-building technology.

BBR later branched into general construction, a sector which is only just emerging from a recession in the wake of the 1997-98 Asian crisis.

With a market value of US$47.3 million, BBR now ranks 14th out of 24 companies in the Singapore Construction Index .

Mr Tan said Singapore accounts for about 60 per cent of revenues, and would continue to do so, even as the company expands into Malaysia, Thailand, the Philippines and Sri Lanka.

BBR is also eyeing Saudi Arabia, Qatar and other markets in the Middle East for possible construction contracts, Mr Tan said.

Mr Tan said that BBR, which reported a 21 per cent increase in net profit last year, expects to post a similar profit in 2006. The firm made a net profit attributable to shareholders of S$2.1 million in 2005.

'We expect to remain profitable,' Mr Tan said, adding that this year's net profit would be 'about the same' as last year's, although he declined to give a more detailed forecast.

BBR reported that its first-half net profit fell 50 per cent to S$865,000 from the same period a year ago. Mr Tan said this was due to project delays, and also because the firm would only recognise some projects in later accounting periods.

BBR hopes to roughly double its revenues within the next three to five years.

'In terms of growth, we hope to generate S$200-250 million of turnover, up from our current S$120 million,' Mr Tan said, adding that the firm's current order book, which stands at S$280 million, should increase by about 5-10 per cent a year. - Reuters