By VEN SREENIVASAN
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LATE last week, infrastructure engineering specialist Lum Chang Holdings Group (LCH) announced its latest contract which marks a coming of age for this 60-year-old engineering company.
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In an announcement made quietly through the Singapore Exchange, the mainboard-listed company revealed that it had clinched a windfall $452 million Land Transport Authority (LTA) Mass Rapid Transit project.
The project is for the design and construction of the Bukit Panjang MRT Station of the Downtown Line Stage 2, which will be located along Upper Bukit Timah Road at the junction of Bukit Panjang and Choa Chu Kang Road/Wood- lands Road, and the 'cut and cover' tunnels connecting the Bukit Panjang Station to a depot at Gali Batu.
Not surprisingly, this usually illiquid counter sprang to life last Friday afternoon, rising as much as 25 per cent during the three hours after its lunchtime announcement.
This latest contract - LCH's single largest to date - will boost its order book from some $563 million to more than $1 billion. It will also keep the company busy through the next six years.
While this project will not have a material impact on the final results of LCH for the current financial year ending June 30, 2009, it will boost LCH's topline by an additional $80 million every year for the next five years. Work on this latest contract is expected to start later this month, with a targeted completion date in 2015.
This is on top of various other projects it is currently involved in, including its $322 million joint venture project with Japanese multinational engineering firm Nishimatsu on the MRT Circle Line Stage 2, its $83 million Twenty Anson project and its $150 million Changi Business Park Phase I and II projects.
Company officials have remained characteristically reticent and have refused to elaborate on the latest contract. But as industry insiders observe, the contract signifies a maturation from its beginnings as a general construction contractor.
This is because, for the first time, the company has bid and won a major infrastructure project as a Class A engineering contractor.
Class A companies are those with the technological and engineering capability to bid independently and singly for large and complex civil and infrastructure projects without having to partner with seasoned multinational giants.
There are believed to be less than a dozen homegrown companies with such class A certification.
Clinching such a huge deal single-handedly also places it in a strong position to bid for many of the $50 billion worth of infrastructure projects - especially in land transportation, comprising MRT and road tunnels in the pipeline over the next 20 years.
The company is not new to the MRT infrastructure business, having worked on the Bishan depot, and the City Hall, Lavender, Bugis and Clarke Quay stations. But those projects were all done in partnership with Nishimatsu.
It was also involved in the award-winning $213 million Changi Water Reclamation Plant, which will be officially opened by PM Lee Hsien Loong.
Lum Chang is now well positioned to capitalise on more opportunities as the Singapore government prepares to spend up to $20 billion on public-sector construction this year, in projects such as the Downtown MRT Line, Marina Coastal Expressway, Sports Hub, a new cruise liner terminal, parks in the Marina Bay area, the upgrading of HDB estates, water and drainage projects, schools and more. Another $17 billion will be spent annually on public-sector construction in 2010 and 2011.
It is now preparing to bid for several of the 20 project packages on the Downtown 3 Line, running from the City to Changi Expo.
The experience Lum Chang gains from the numerous and complex infrastructure projects in Singapore will also enhance its standing as its broadens its footprint around the Asia-pacific and beyond. This junior partner of global infrastructure giants has certainly come of age.
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