New Issue: Koh Brothers Group Limited announces SGD 4.5Y senior unsecured notes at a yield of 5.20%.

Koh Brothers Group Limited (KOHSP) is a Singapore-based construction, property development and specialist engineering solutions company.

The group operates across three segments: 

Construction and Building Materials, where the group undertakes various construction activities, including civil engineering, and supplies ready-mix concrete and pre-cast concrete products. 

Real Estate, where the group generates income from the development of both residential and commercial properties.

Leisure & Hospitality, which involves hotel operations and management service.

Improved profitability for the group

For the full year ending 31 December 2025 (FY2025), the group reported a 38.2% year on year (YoY) surge in revenue to S$329.4m (compared to FY2024: S$238.4m). Gross profits, too, soared 103% YoY to S$39.1m (FY2024: S$19.3m), supported by an improvement in gross margin (FY2025: 11.9% compared to FY2024: 8.1%). Management attributed this improvement to increased contribution from higher-margin construction and real estate projects, better pricing for new contracts secured in FY2025 and better cost of goods sold management. Operating expenses saw a decent decline to S$25.8m (compared to FY2024: S$31.9m), mainly due to a halving of finance costs (S$6.3m compared to FY2024: S$12.2m). 

Consequently, the group saw a swing to profitability for both its pre-tax and post-tax income of S$29.6m and S$25.5m, respectively, marking a turnaround from loss-making in FY2024. Do note that only S$18.6m of the S$25.5m is attributable to the equity holders of KOHSP.

Looking at the group’s operating performance, EBITDA remained flat at S$132.6m (FY2024: S$128.5m), while net operating cash flow (OCF) rose 5.6% YoY to S$64.6m for FY2025 (FY2024: S$61.1m). Free cash flow is stable at S$59.6m. In our view, the group’s operations saw a major improvement compared to FY2024. Looking forward, we expect KOHSP’s operating performance to remain resilient, with scope for improvement, supported by a strong order book exceeding S$1b, which provides revenue visibility to 2029.

Credit Profile 

As of FY2025, KOHSP holds S$114.3m in cash and bank balances, against a gross debt of S$140.0m. Do note that most of the cash is held at the various subsidiaries of KOHSP due to working capital needs and may not be directly accessible to KOHSP. We note that compared to FY2024, both these figures represent an improvement of the group’s liquidity profile (FY2024: S$71.1m for cash, S$168.3m in gross debt), owing to KOHSP’s operating improvement. These factors caused an improvement of KOHSP’s leverage metrics, with net gearing ratio (net debt/equity) declining to 9% (FY2024: 37%). Similarly, the group’s improvement in EBITDA has led to the strengthening of its interest coverage, coming in at 7.20x for FY25 (compared to FY24 of 1.12x).  

Looking ahead, KOHSP has S$103.8m in borrowings coming due over the next year, a figure that is comfortably covered by the group’s cash on hand and its OCF. Therefore, we see little risk in the group being unable to meet its current obligations.

Table 1: Peer Comparison

Overall, KOHSP’s credit profile is decent and has seen improvement over the last year. 

In Table 1 shown above, we compare the new issue against bonds issued by KOHSP’s peers in the property space (Wee Hur, City Development Limited). We note that this new issue provides an attractive yield pickup ranging from 70 bps to 180bps compared to these peers with comparable credit profiles.

We think these new KOHSP bonds provide a decent income option for investors who are comfortable with a slightly smaller issuer (compared to its peers of Wee Hur and City Development Limited).

Disclosure: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report holds NIL positions in the abovementioned securities. This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.