This article first appeared in The Edge Financial Daily on June 7, 2017
KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) is on the lookout for more construction jobs, with some RM6 billion worth of tenders submitted to replenish its order book for the financial year ending Dec 31, 2017 (FY17), said its executive director Mohd Imran Mohamad Salim.
“At any given year, we are expecting our construction order book to stand at around RM5 billion to RM7 billion, just to ensure that we can have earnings visibility for the few years ahead,” Mohd Imran told the media after the group’s 46th annual general meeting yesterday.
“For FY17, we are expecting to book at least 10% of the tenders that we have submitted, and we will continue to submit for tenders whenever there is an opportunity to do so,” he added, noting the projects tendered are in the areas of civil engineering, flood mitigation, railway and infrastructure related business.
Currently, MRCB’s order book stands at RM7.04 billion, of which RM5.36 billion has yet to be billed. The construction business currently generates 36% and 2% MRCB’s total revenue and operating profit respectively.
Mohd Imran pointed out that MRCB will bid for construction projects worth RM70 million and above to ensure that it can rake in reasonable margin.
Besides the current construction project, Mohd Imran noted MRCB is still waiting for the clarity on the outcome of the tender to build an incinerator in Taman Beringin, Kepong, which has the daily capacity to process 1,000 tonnes of solid waste.
Meanwhile, Mohd Imran said MRCB is working towards the listing of its construction arm, but sets no deadline for it to happen.
“Listing our construction arm into a separate entity is one of the many options. But, it is not something that we are going to do at least for now as we need to further enhance the business,” Mohd Imran said.
“MRCB will also be looking at identifying strategic partners which can contribute their technical and industry knowledge,” he added.
This year, Mohd Imran said MRCB is confident in achieving its sales target of RM1.3 billion, underpinned by its developments such as 9Seputeh, Sentral Suites, Bukit Rahman Putra and Bandar Seri Iskandar.
“As of May 31, 2017, our property sales had been encouraging. We managed to sell some RM750 million from January to May this year,” he added, noting that currently, MRCB’s unbilled sales stand at RM1.5 billion.
At the same time, Mohd Imran also said MRCB is looking at potential disposal of its property assets as it embarks on an asset light strategy.
“We will explore the possible sale of Ascott Sentral this year. And once we complete building Menara Celcom in Petaling Jaya, we may be looking at disposing of our assets to our property investment company, MRCB-Quill Real Estate Investment Trust,” he added.
Currently, MRCB has some 400 acres (161.87ha) of urban land, with a potential gross development value of RM48.9 billion.
“MRCB will focus on its strength as a transit-oriented development (TOD) firm. We will also be actively exploring brand alliance with renowned luxury hotels and resort operators for the upcoming development of our land bank,” Mohd Imran said.
At the same time, he added that MRCB will also be exploring new strategic alliances and collaborations by identifying a strategic partner in the retail space, in view of the sizeable portfolio of retail malls required in the pipeline for its TOD projects in Kwasa Sentral, Penang Sentral and PJ Sentral.
MRCB has recently proposed a rights issue to RM2.86 billion fresh capital to reduce borrowings and for working capital. Meanwhile, the conglomerate has also formed a partnership with its controlling shareholder the Employees Provident Fund to develop the 76 acres of land in Bukit Jalil.