This facility, the sixth in Singapore, can produce up to 100,000 cubic metres of precast components a year, which is enough to build 17 blocks of flats. For one, this will speed up the public housing construction programme.

HLA’s CEO Stephen Ho says in an interview with The Edge Singapore: “People are looking at alternative ways of construction to produce some of these apartments more quickly. The process also sits very nicely with the whole sustainability discussion that’s confronting a lot of players like ourselves.”

“What it means is that you can reduce the noise and dust pollution at the site level. Efficiency is also gained from greater automation and we rely less on manpower,” he adds.

HLA’s chief investment officer Patrick Yau says precast may become the dominant method of building for high-rise construction, at least for the residential sector in Singapore. He adds that usage of the material has been given a boost as the Singapore government requires developers to use precast in about 60% of the project’s structure above the basement if it buys a piece of land from government land sales (GLS).

The use of precast in construction is not new although it has not gained widespread use. Detractors list factors including costs as a reason why the take-up rate isn’t as high as expected. However, HLA’s executives disagree that cost is an issue. Ho maintains that the pricing of prefab parts made in Malaysia remains “competitive”. The bottleneck is finding enough storage space, adds Kwek Pei Xuan, HLA’s director and head of sustainability and corporate affairs.

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Besides meeting a growing trend, the re­cent opening of HLA’s prefab hub, whose development was underway before the Covid-19 outbreak, has gained greater urgency even after the pandemic.

When borders were slammed shut during the pandemic and construction activity ground to a halt, both the supply of workers and materials were affected, explained Yau.

Specifically, precast parts, which had readily been imported from Malaysia, were hit as they were deemed non-essential. “That’s why the rebalancing to have Singapore produce a bit more has begun,” explains Yau.

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Diversifying its sources of supply was also another key lesson due to the lessons learnt from the pandemic lockdown, in case one of the sources — even if it is the cheapest — suddenly becomes unavailable, notes Yau.

Says Ho: “What we’ve done is to look at more regional sourcing so that it reduces the need to transport these raw materials from long distances and the freight rates are cheaper. Therefore, regionalisation has become our strategy for procurement.”

HLA has long-standing ties with other industry players including Japanese cement company, Taihaiyo Cement Corporation, which has been a business partner since HLA was founded 60 years ago. To further strengthen its vertically-operated business model, HLA recently acquired new quarries in Indonesia and Malaysia.

“Upstream, we have our own quarries producing cement. Downstream in Singapore and Malaysia, we’re a ready-mix concrete player. Further downstream, we see opportunities in enhancing our precast capabilities,” Ho explains. “All of that when you look at the value chain, we can capture more value in the downward chain and hopefully that model is going to give us that resilience.”

Building resilience in its supply chains is an integral part of the overall sustainability efforts of HLA, which is spearheaded by Kwek, who is the daughter of Kwek Leng Peck, HLA’s executive chairman.

One way HLA wants to do its part is to gradually change its fleet of more than 200 trucks from existing ones carrying just 9 cubic metres of cargo to those with a capacity of 12 cubic metres. By doing so, HLA can be more efficient as fewer trips are needed to deliver the same volume of cargo. “This also reduces traffic on the road, emissions and our reliance on drivers,” explains Kwek.

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Other initiatives include pushing for the use of granite fines to replace sand. Granite fines are the by-products of crushing granite rocks in quarries into “coarse aggregate”, according to the Building and Construction Authority (BCA).

In December 2007, the BCA issued a circular that suggested the use of granite fines in concrete as a replacement for sand. “Due to limited availability and lack of quality control on natural sand, as well as environmental concern over landfills of granite fines, it is justifiable to motivate the adoption of granite fines in the production of concrete,” says BCA in its report.

According to Kwek, HLA was already working towards such a replacement even before the pandemic and within Singapore, the company has practically completed the transition. “Covid helped to push the agenda along to convince people we can’t be so reliant on sand,” she explains.

Another initiative is to use fly ash mixed with cement instead of pure cement or ordinary Portland cement (OPC), says Yau. Fly ash refers to the ash from power stations after the coal is burnt. By using fly ash, less cement is used in the mix that produces concrete. According to the US Federal Highway Administration (FHWA) under the Department of Transportation, the use of fly ash can help improve the performance of concrete in its fresh or hardened state.

“Fly ash use is also cost-effective. When fly ash is added to concrete, the amount of Portland cement may be reduced,” says the FHWA. According to Ho, every tonne of OPC that is replaced by fly ash saves the release of about one tonne of carbon dioxide into the atmosphere.

For HLA’s Malaysian building materials unit, Tasek, which manufactures and sells cement and cement-related products, the group is embarking on measures to produce cement with less energy-intensive methods, says Yau.

He explains: “One example is replacing some of the materials with harder-to-use waste materials, We recycle the waste materials and use them as part of the cement-making process to lower the total energy we have to purchase — say coal — which is a traditional source.”

“Another way is to use granite fines instead of sand to make concrete. That involves recycled material that would otherwise not be used,” he adds.

In Singapore, HLA has taken it a step further by having its concrete green-certified, which means the company now has a full suite of products to meet various requirements.

“It helps that the BCA and the Ministry of Sustainability and the Environment are pushing for the 100% replacement of sand with granite fines,” says Kwek.

She adds: “In Malaysia, we’re also certifying our cement and concrete products to be green. Part of that is ensuring that we have a consistent supply of waste materials used in our green products.”

The next step is for HLA to have its sites green-certified. Out of its 10 local sites, one of the sites has “done quite well” and HLA intends to replicate its success with the other batching plants that it has, says Kwek.

For example, at the recently opened pre-fab hub, 1,729 solar panels were installed to generate a quarter of its own energy needs. While these various initiatives may seem small in isolation, Yau says they will add up to help power the sector’s “green wave”.

On Aug 11, HLA announced 1HFY2023 ended June earnings dipped 27.7% y-o-y to $30.8 million, partly due to the absence of the one-off gain from the disposal of held-for-sale assets. Revenue fell by 1.0% y-o-y to $2.08 billion due mainly to a weaker renminbi versus the Singdollar, although the drop was offset by revenue growth from Tasek, the cement subsidiary.

HLA’s powertrains segment — produced by its separately listed unit China Yuchai International — saw revenue dip by 2.4% y-o-y to $1.76 billion. However, thanks to a better sales mix of products with higher profitability, profit after tax increased by 60.5% y-o-y to $48.1 million.

Meanwhile, turnover for its building materials segment grew 8.6% y-o-y to $306.3 million while profit after tax increased 8.3% y-o-y to $31 million.

Despite the resumption of construction activities, which would directly increase demand, HLA’s executives prefer to maintain a cautious stance. Yau says the industry is still in a “catch-up mode”, and “cannot be hurried” as it takes time for concrete to set.

“Even though [the catch-up] is progressing, it will take some years for us to actually deal with the backlog that’s been built up over the past three years when Covid came,” he adds.

“There are also processes that need to be followed. Safety is uppermost in our minds as well. So, you know, the more you hurry, the worse this becomes, so you want to pay attention to the safety and wellness of our staff,” adds Ho.

HLA has yet to attract active coverage from analysts. The most recent call was by CGS-CIMB on March 13 when analyst Ong Khang Chuen made an “add” call and a $1.10 price target.

HLA shares closed at 61 cents on Aug 29, down by more than 5% in the year to date. At this level, the company is trading at historical earnings of less than 11 times and gives a yield of over 3%.

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