Dear Shareholders,
On behalf of the Board of Directors, we are pleased to present to you the annual report of Sin Heng Heavy Machinery Limited and its subsidiaries (the "Group"), for the financial year ended 31 December 2022 ("FY2022").
Outlook and Key Events
In FY2022, the Group has recorded total revenue of S$51.6 million and gross profit of S$12.8 million, representing a year-on-year decrease of 4.0% and 4.1%, respectively. Profit for the year was S$3.7 million, a decrease of 3.1% compared to FY2021.
The global economy experienced multiple challenges in 2022 - rapidly rising inflation and interest rates, intensifying geopolitical tensions and supply chain disruptions, which were further worsened by the Ukraine war. Against this challenging backdrop, we considered the current financial performance to be reasonable.
Additionally, the Group has also considered the local political climate in Myanmar and had taken steps to reduce our risk exposure, which resulted in a lower contribution from the Myanmar operations to the Group's FY2022 results.
In 2022, we took the opportunity to recycle some of our aging equipment in our rental fleet with newer equipment by taking advantage of the cheaper Japanese Yen. This is in order to capitalise on the emerging demand from the public construction sector for new MRT lines. With the new MRT lines, it would increase connectivity and make commuting more efficient.
We funded our equipment acquisition through a mixture of cash reserves and debt financing. We learned from the pandemic times, the importance of having healthy cash reserves that enabled us to withstand the difficult environment.
On other matters, we have embarked on a re-development of our workshop facility located at 26 Gul Road, Singapore 629346, in conjunction with our successful 20-year lease extension from JTC Corporation. This construction of the new workshop facility will enable us to have a modern facility capable of meeting our operational demands. It is expected to be completed by the first half of 2024.
Outlook
The Building and Construction Authority ("BCA") has announced that the total construction demand in 2023 is projected to range between $27 billion and $32 billion, with the public sector expected to contribute about 60% of the total construction demand, between $16 billion and $19 billion. Civil engineering construction demand is anticipated to stay firm with continued support from MRT line construction and other infrastructure works. Over the medium-term, BCA expects public sector construction demand will be supported by various major developments such as MRT projects including the Cross Island Line (Phases 2 & 3), Downtown Line Extension to Sungei Kadut and Brickland North South Line station and Toa Payoh Integrated Development and Woodlands Checkpoint redevelopment.
Locally, Singapore's seventh and eighth MRT line, the Jurong Region Line ("JRL") and Cross Island Line ("CRL") had begun construction in Q1 2023. Sin Heng is heavily invested in the success of these new MRT lines and the public construction sector, and we will always support the improvement of our local infrastructure for a better and greener future for all Singaporeans.
In the region, the elevated interest rate environment will pose financing and credit risks while geopolitical, inflation and the recent banking crisis will heighten pressure to the existing operating business environment. The Group will continue its efforts to streamline and renew its rental fleet in tandem with the market requirements.
As the Group gears up for the future, we will continue to closely monitor the market and economic conditions to capitalise on all suitable opportunities as we strive to preserve and maintain our success story.
Dividend
For FY2022, the Board of Directors have proposed a dividend of 3.5 Singapore cents per ordinary share to reward our shareholders for your resolute loyalty to Sin Heng over the years. The proposed dividend comprises a first and final dividend of 1.0 Singapore cents and a special dividend of 2.5 Singapore cents respectively, totalling S$4.0 million, subject to shareholders' approval at the forthcoming Annual General Meeting.
Changes to the Board
During the year, our Non-Executive Non-Independent Chairman, Mr. Teo Yi-Dar, and Lead Independent Director, Mr. Soh Sai Kiang, had retired from the Board. We would like to express our deepest gratitude to both Directors for their leadership and guidance to Sin Heng over the years.
We would also like to extend a warm welcome to Independent Director, Mr. Rai Satish, who joined us on 27 September 2022. Mr. Satish is also a member of the Audit ad Risk Committee, Nominating Committee and Remuneration Committee. We are confident that his insights and experience will be invaluable to the Group.
Acknowledgement and Appreciation
On behalf of the Board and Management, we would like to extend our appreciation to our team of dedicated staff who have showcased their commitment, perseverance and tenacity in the current business environment. Your combined efforts have allowed Sin Heng to achieve our success today, and the continuation of our teamwork can attain greater heights collectively.
Last but not least, to all of our valued customers, suppliers and business associates, we would also like to take this opportunity to extend our gratitude for your unwavering support and trust in us, and to take our partnerships to the next level.
Leong Wing KongIndependent Chairman |
Tan Ah LyeExecutive Director & CEO |