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Launched in 2006, Vietnam Singapore Industrial Park II is close to full take-up, with 95% of the land available taken up. |
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Developing a new 700-hectare industrial park and township in Bac Ninh Province in northern Vietnam. |
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Memorandum of understanding signed to explore the feasibility of developing a 1,200-hectare industrial park and township, in Hai Phong, Vietnam’s third largest city. |
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Owns, develops, markets and manages industrial parks in Indonesia, China and Vietnam. |
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Recognised as one of the leading industrial space providers in Southeast Asia, with over 400 multinational companies and leading local enterprises as tenants. |
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Expertise in industrial park management and international marketing attracts premier customers, including multinational companies and leading local enterprises. |
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Integrated approach to township development designed to provide a world-class manufacturing environment. |
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Sembcorp's Industrial Parks business' turnover for 2007 was S$25.8 million compared to S$68.0 million in 2006. This was due to the divestment of Wuxi Garden City Mall Hotel, as well as the deconsolidation of Vietnam Singapore Industrial Park (VSIP) as a subsidiary with effect from April 2006. Profit After Tax and Minority Interest (PATMI) before exceptional items (EI) in 2007 was S$34.0 million compared to S$42.4 million in 2006. PATMI before EI in 2006 included a significant one-off gain of S$16.4 million due to the write-back of provision on recovery of loan and interest income from Wuxi-Singapore Industrial Park (WSIP). Excluding this one-off gain in 2006, our industrial parks business' performance in 2007 would have improved over the previous year. In addition, Gallant Venture's profit contribution in 2007 was lower than its contribution in 2006. PATMI after EI was S$72.7 million compared to S$149.3 million in 2006. In 2006, the unit's exceptional gain totalled S$106.9 million, mainly due to the sale of Wuxi Garden City Mall, while in 2007, an exceptional gain of S$38.7 million was recorded from the sale of 70 million (2.9%) of Gallant Venture shares.
In 2007, Sembcorp's VSIP projects in Vietnam continued to deliver strong performance and growth. Reflecting strong demand from the country's industrial sector, 2007 saw 18 new customers signing agreements to locate in VSIP I and 17 existing tenants expanding their operations in the industrial park, which now
hosts 239 tenants. The land area developed for
sale is now 81% occupied, while factory space in
the industrial park remains fully occupied. To meet
additional demand for utilities, VSIP I increased its
water supply to tenants from 33,000 to 42,000 cubic
metres per day in the third quarter of 2007. Sewage
treatment capacity was also expanded by 6,000 cubic
metres per day, bringing total capacity to 12,000 cubic
metres per day. The expansion will be operational by
end of first quarter 2008.
Likewise, VSIP II also saw growth. The factories
remained fully occupied, and as of December 2007,
VSIP II had 114 customers, including 45 new customers
secured during the year. Three existing tenants also
expanded their operations. Launched in 2006, 95%
of the land in the newly developed industrial park
has already been taken up. The supply of utilities
has also been increased to meet demand. Water
supply in VSIP II was increased from 5,000 to 7,900
cubic metres per day in the fourth quarter of 2007.
Meanwhile, construction of its 6,000 cubic metres per
day sewage treatment plant was completed and will
be operational by the first quarter of 2008.
During the year, we expanded our presence in
Vietnam with the launch of a third VSIP project in
Bac Ninh Province in July. The new VSIP-Bac Ninh
project not only marks our entry into the growing
northern Vietnam market, but will also showcase our
first integrated industrial park and township concept
in the country. Akin to a city within an industrial
park, the industrial township will offer a world-class
manufacturing, residential and commercial
environment for multi-national companies and local
leading enterprises, and is an improvement over
traditional industrial parks in terms of urban planning
and facilities. The 700-hectare VSIP-Bac Ninh, which
will consist of 500 hectares of industrial area and 200
hectares for residential and commercial development,
is strategically located within Vietnam's Northern
Economic Zone near Hanoi. VSIP-Bac Ninh will be
home to non-pollutive, high-tech and capital intensive
industries. Since the announcement of the US$103.7
million project in July, 15 new customers have already
signed letters of intent to set up operations in the
park. The investments are set to occupy 130 hectares
of land.
With the latest project in Bac Ninh, VSIP has
established three industrial parks and townships in
Vietnam totalling 1,545 hectares. The industrial parks
have attracted 368 customers to-date. In August, a
memorandum of understanding was also signed with
the People's Committee of Hai Phong City to explore
the feasibility of developing a fourth VSIP project,
a 1,200-hectare industrial park and township, in Hai
Phong, Vietnam's third largest city.
In China, our WSIP operations saw land take-up
reach 100% during the year. Over 80% of the
factories in the industrial park are now occupied.
New commitments were signed with four companies
while 18 existing tenants expanded their operations
in the industrial park. Most notably in December
2007, a 12-year lease agreement was signed with
NYSE-listed Suntech Power, the world's largest solar
module manufacturer. WSIP will construct a 110,000
square metre build-to-suit factory for Suntech, to be
completed in July 2008. There are currently 68 tenants
operating in WSIP, with a total investment value of
about US$1.7 billion.
Gallant Venture's profit contribution in 2007 was
lower than in 2006. This was mainly due to lower
revenues from land sales and rentals, partially offset by
lower operating cost, financing cost and tax expense.
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A customer views a scale model of Sembcorp's flagship Vietnam Singapore Industrial Park. Sembcorp's dedicated staff at the industrial
park partner customers and tenants, seamlessly providing essential services to support their businesses. |
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The current economic outlook for our key market
of Vietnam is positive. Local economic policies and
the overall business environment have improved with
Vietnam's accession to the World Trade Organisation
in 2007. Export revenue is targeted to grow 22% in
2008. Likewise, industrial production is expected to
post robust growth with Binh Duong, Hanoi and Hai
Phong amongst the best-performing provinces. In
view of the positive economic outlook, we expect our
Vietnam industrial parks to continue performing well.
In particular, as electronics and automotive industries converge in manufacturing locations outside Hanoi,
we expect good take-up rates for VSIP-Bac Ninh,
in northern Vietnam.
WSIP in China is expected to continue generating
stable baseload earnings from utilities supply and
rentals. However, with the available land fully taken
up and factory space reaching almost full occupancy,
profit growth from the sale of land is expected to
moderate. According to China's National Bureau of
Statistics, 2007 saw China's economy growing 11.4%
and industrial output expanding 18.5%. For 2008,
the World Bank forecasts China's Gross Domestic
Product to grow by 9.6%. WSIP is well-positioned to
benefit from continued growth in the country and
plans are currently underway to further develop and
expand the industrial park. WSIP has evolved from a
general industrial park to one that caters to IT-related
and high-tech manufacturing, with the potential for
business park development.
Our Industrial Parks unit aims to maintain its
performance in 2008. However, should the USA enter
into a prolonged recession, causing a slowdown in the
manufacturing sector, the Industrial Parks business
may be affected.
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