Saturday, August 16th, 2025

Union Steel Holdings’ Subsidiary Acquires 1 Benoi Road Property for S$7.5 Million to Expand Fabrication Capabilities 1

Union Steel Holdings’ S\$7.5M Waterfront Property Acquisition: Strategic Expansion, Shareholder Implications & Price Risks

Union Steel Holdings Announces S\$7.5 Million Waterfront Property Acquisition – A Game Changer for Growth?

Key Highlights of the Report

  • Union Steel Holdings Limited, through its wholly-owned subsidiary Applied Engineering Pte Ltd, has exercised an option to purchase the leasehold property at 1 Benoi Road, Singapore 629875 for S\$7,500,000 (excluding GST and stamp duty).
  • The property includes significant waterfront access, a large land area (48,183 sqm), and extensive industrial facilities such as workshops, storage, and fabrication areas.
  • The transaction is subject to JTC Corporation’s approval for both the assignment of the lease and an additional 8-year extension, potentially extending the tenure until 15 April 2038.
  • The purchase price is well below the independent valuation (S\$11,400,000), suggesting a strong value proposition.
  • The deal will be funded by a mix of internal resources and bank borrowings.
  • The acquisition is classified as a “disclosable transaction” under SGX-ST Listing Manual, with the consideration representing 11.10% of the company’s market capitalisation.
  • Estimated total acquisition costs (including GST and stamp duty) are S\$8,520,000.
  • The acquisition is expected to boost fabrication capabilities for oversized pressurised equipment and enable expansion in ship repair and heavy steel component production.
  • No related party transactions; neither directors nor substantial shareholders have any interests in the deal outside their shareholdings.
  • The transaction will cause a slight decrease in NTA per share (from 67.95 to 67.91 cents) but a modest increase in EPS (from 10.78 to 10.98 cents).
  • Completion is conditional on JTC approvals and is expected within 28 days after such approvals are received.

What Retail Shareholders Need to Know

  • Strategic Expansion: The acquisition is designed to enhance operational capacity, allowing the company to take on larger and more complex projects in fabrication and ship repair. This could translate into higher revenues and profits in the medium term.
  • Waterfront Access: Direct shoreline access (230 meters) is rare and valuable for industrial operations, especially in heavy fabrication and marine sectors.
  • Significant Discount: The purchase price is substantially below independent market valuation, suggesting management has negotiated a value-accretive deal.
  • Conditionality Risks: The deal is not yet complete – it is subject to JTC’s consent for both the transfer and the lease extension. If these conditions are not met, the acquisition will not proceed, which could affect market sentiment.
  • Financial Impact: The acquisition is not expected to dilute existing shareholdings or involve new share issuance. There is a minor reduction in NTA per share, but a small increase in EPS is projected, indicating overall accretive earnings effect.
  • Potential Price Sensitivity: Announcements regarding JTC approvals or any delays/denials could be price-sensitive. The market may react positively to news of successful completion, or negatively if the acquisition falls through.
  • Inspection Rights: Investors can inspect the Option and Valuation Report at the company’s registered office, increasing transparency.
  • Caution Advised: Investors are warned that the transaction is not yet complete and should not make trading decisions solely on this news.

Detailed Analysis of the Acquisition

Union Steel Holdings Limited is making a bold move with the proposed acquisition of a strategically-located, waterfront industrial property at 1 Benoi Road. The S\$7.5 million price tag (excluding GST and stamp duty) is markedly below the independent valuation of S\$11.4 million, suggesting considerable upside if the deal closes successfully.

The property itself is highly attractive: it features a variety of industrial buildings, workshops, storage areas, and direct access to the waterfront – critical for large-scale fabrication and marine operations. The land area (48,183 sqm) and 230-meter shoreline provide significant operational advantages.

The acquisition is part of a targeted strategy to boost Applied Engineering’s capabilities in fabricating oversized pressurised equipment and expand its ship repair work, both of which require direct waterfront access. Management believes this will enable the company to capture larger projects and strengthen its competitive position.

Funding will come from a mix of internal cash and bank loans, with no new shares being issued, so existing shareholdings remain unaffected. The total estimated cost (including taxes and duties) is S$8.52 million.

From a financial perspective, the deal is classified as a “disclosable transaction” under SGX rules, as the consideration represents 11.10% of the company’s market cap. The impact on key financial metrics is minimal: a slight decrease in NTA per share and a modest increase in EPS, indicating the transaction is accretive to earnings.

However, shareholders must note that the transaction is conditional on JTC approval for both the lease assignment and the sought-after eight-year extension. Completion is expected within 28 days of receiving these consents. If JTC does not approve, the deal will not go through, which could impact share price and investor confidence.

There are no related party issues, and no board appointments or new service contracts are proposed in connection with this transaction. The company commits to making further announcements as material developments occur.

Conclusion: Will This Move the Share Price?

This acquisition could be a major catalyst for Union Steel Holdings. If completed, it positions the company for expansion into higher-value contracts and larger-scale projects. The value-accretive nature of the deal, combined with the strategic asset acquired, could drive share price appreciation once the conditions are met and the market sees operational benefits.

However, investors should be vigilant and await further announcements, particularly regarding JTC approval. Any delays, conditions, or refusals from JTC could negatively impact sentiment and the stock.

Disclaimer

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should conduct their own due diligence and consult their financial advisors before making any investment decisions. The completion of the transaction is subject to conditions precedent and regulatory approval, which may or may not be fulfilled.


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