Is King Wan Corporation Ltd (SGX:554) More Than Just Mobile Toilets?
If you ever ran a marathon in Singapore or have participated in a major event within the lion city, chances are that you might noticed/used the portable toilets labelled “K&W” deployed at strategic locations.
These mobile sanitary facilities are rented from King Wan Corporation Ltd (SGX:554).
King Wan Corporation Ltd (KWC) was founded in 1977 as a Mechanical & Electrical Engineering (MEE) company, providing a wide range of construction services including plumbing & sanitary works, electrical engineering, installation of fire protection & alarm systems, air-conditioning and mechanical ventilation systems. The “K&W” Mobile Loo Services mentioned earlier was set-up in 1996 and have grown to more than 1,000 portable lavatories, renting out these equipments to major contractor and event organizers. Even though the portable toilet services contributed a small percentage to the Group’s top line, it does provide a steady stream of recurring income.
Although the Mechanical & Electrical Engineering business accounting for the core operations of the Group, KWC is also involved in a series of small investments which have added value for shareholders over the past years. Two notable investments which have paid off well for them are:
KWC bought a 30% stake in Cables International (specialty cables suppliers for the offshore & mining sectors) for S$600,000 in 2003, after which it has sold off its interest to Halcyon Energy for S$9 million, a whopping 47.2% CAGR!
The Group has also ventured into the sugar cane business through a 20% stake in Environment Pulp and Paper Company Ltd (EPPCO) and a 20% stake in Ekarat Pattana (EK), which produces, sells and distributes ethanol in Thailand for chemical applications and consumption. KWC purchased both interests for S$11.66 million in 2004. On 25 Apr 2012, the Group sold their stakes to Kaset Thai Industry Sugar Company Ltd (THB:KTIS) – listed in Apr 2014 for S$50.2 million, 95% of which in the form of KTIS shares. King Wan is currently holding 3.01% KTIS, worth approximately S$45.4 million at the time of the Group’s Annual Report 2014 publication.
Value in Action
Despite the few successes which KWC had pulled off in its investments, we should still focus on its sustainability of its core business and be more discerning in its other investments (i.e. Vessel Ownership & Chartering and the Dalian Shi Cheng Property Development Project). Moreover, the Group has recently established a S$150 million Multicurrency MTN Programme which investors should question where the debt raised might be channeled to.
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All views and opinions articulated in the article were expressed in Willie’s personal capacity and do not in any way represent those of his employer and other related entities. Willie does not own any shares in the companies mentioned above
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