Links :
http://nextinsight.com.sg/index.php/foru...9&Itemid=1
The business : KORI
Unlike peers in the construction industry, Kori occupies a niche -- 99% of its business is related to the underground construction of Singapore's MRT network.
Kori currently is involved in tunneling work and supplying and installing structural steelworks on the Downtown Line.
Kori Nobuaki, chairman of Kori Holdings.
As its orderbook winds down to S$30 million or so currently from $70 million at the start of this year, it will jump up again when the Thomson Line tenders are awarded.
Kori targets to clinch 4-5 projects for the Thomson Line, starting from 1H2014, said Mr Hooi.
As a BCA-licensed contractor for Earth Retaining or Stabilising Structures, Kori counts only 3 key direct competitors -- market leader Yongnam, a Taiwanese company and a Japanese company.
"There are lots of MRT work and few players in this niche. We are limited by resources issues such as manpower. We have tried to recruit but it's tough," said Mr Hooi.
An aspect of the business is notable: From 2008, Kori started buying steel struts. It would supply - actually they were sold to its customers, the contractors -- and install the steel struts for MRT projects.
When a project is over after 2 years or so, Kori would buy back the steel struts (at a much lower price, of course) and then supply them to another contractor at another project.
Kori recoups all the initial cost of the assets after the second round. From next year -- ie, with the Thomson Line projects -- a large proportion of the steel assets would have paid for themselves. Kori continues to grow its steel inventory at about 6-7K tonnes a year.
Kori now owns 40,000 tonnes of steel struts, about a quarter of Yongnam's 160,000 tonnes.
Mr Hooi said each of its projects needs about 10,000 tonnes which in turn generates about S$20 million of revenue.
With its 40,000 tonnes of steel struts, Kori generates about S$80 million of revenue over two years, the typical duration of a project.
Remarkably, Kori's gross profit margin has ranged between 19.6% and 23.9% in the last four years