ST Engineering acquires shipyard from Keppel FELS for S$95 million

DEFENCE and engineering group ST Engineering has acquired the site and assets of an existing shipyard at 55 Gul Road in Singapore from Keppel FELS – a subsidiary of Keppel Corp’s offshore and marine arm – for S$95 million.

The group will be using the shipyard for its commercial ship repair business under its marine segment, it said in a bourse filing on Thursday (Feb 2). The assets acquired include three floating docks, existing buildings, workshops, and machinery.

The new Gul yard will replace ST Engineering’s existing Tuas shipyard, whose lease is expiring end-2024. The group has another shipyard at Benoi which is mainly for shipbuilding.

The Gul yard has a remaining lease until August 2030, which can be extended by another 20 years. The yard is approximately 141,000 square metres (sq m) and has a gross built-up floor area of 74,593 sq m.

The purchase of the Gul yard removes the need to build a greenfield shipyard, which would “require much higher construction and material costs as well as lead time”, ST Engineering said.

To “maintain its competitiveness in the ship repair segment”, the group added that the Gul yard will be progressively upgraded to a smart shipyard, adopting end-to-end digitalisation that will power the ship repair cycle and processes. The yard will also be used to support the group’s other marine segments, such as module fabrication and offshore renewable projects.

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“Taking over this brownfield site versus constructing a replacement greenfield site is an effective way to minimise capex,” said Ng Sing Chan, president, marine of ST Engineering.

“More importantly, building on the existing infrastructure and facility enables us to start operating immediately and effectively with minimal disruption to our operations.”

Shares of ST Engineering closed at S$3.76 on Thursday, up S$0.05 or 1.4 per cent, before the announcement.