Mencast forms JV, lands S$30m contract
Singapore
MENCAST is reaping more rewards from the goodwill it has built with its clients under two generations of business leaders.
The maintenance, repairs and overhaul-focused (MRO-focused) contracting group on Monday announced its biggest contract win so far - its newly formed joint venture with KSE Marine, a private-owned entity founded by a South Korean residing in Singapore, recently landed a deal worth in excess of S$30 million with a Singapore-based industrial property player.
Mencast entered into an agreement last Friday with KSE Marine for the JV, which will be 51-per-cent owned by the listed MRO specialist. The JV will execute the marine construction and MRO work committed under the umbrella contract awarded to KSE. Work on the contract would last for about two-and-a-half years and will run through to 2020.
Executive chairman and CEO, Glenndle Sim told The Business Times, this latest contract win was made possible because this client-turned-JV-partner sees value in tapping the complementary capabilities Mencast can bring to fulfilling the committed work scope.
He added that the JV partner has had business dealings with Mencast for over 10 years, dating back to the days when the listed firm was helmed by its founding father - the late Sim Giok Han - who handed over the baton to his son in 2009.
He also considered Monday's announced award to Mencast as validation that small and medium enterprises can continue to win contracts in a protracted downturn as long as they can instil in the organisation an ability to adapt to change. The ability to respond to clients' needs is "an asset" that will allow companies to win contracts, both in good and bad times, he explained.
Mencast is embracing artificial intelligence in its operations and expects to roll out the first MRO projects to be performed using an AI technology it helped incubate in the second half of this year. The small-cap MRO specialist is seeking to restructure just under S$200 million of senior loans so as to gain the necessary runway to fulfil the potential of its new business direction.
Most of Mencast's bank lenders "recognised the fact that their client is a forward-looking company", Mr Sim said, adding that UOB and DBS, which have long-term banking relationships with Mencast, "are keen to help SMEs tide over this downturn".
Mencast closed at 9.5 cents on Monday, down 0.1 cent.
