This article first appeared in The Edge Financial Daily on October 24, 2018

KUALA LUMPUR: After a tough financial year ended June 30, 2018 (FY18), which saw its revenue drop by almost RM100 million, Pintaras Jaya Bhd is expecting an earnings rebound in FY19 driven by its new Singapore unit.

Its chairman and managing director Dr Chiu Hong Keong says FY18 was the company’s worst financial performance thus far, but adds that the piling, geotechnical and substructure specialist contractor is looking forward to a better showing this financial year.

“FY18 was a [bad year results-wise] for the group as we faced competition in Malaysia from piling contractors from China who brought in a lot of capacity. However, we believe the worst is over [for Pintaras], at least for the time being, mainly because of our confidence in the Singapore market and what we can do there.

“We are hoping to [triple] our revenue to about RM300 million in FY19, driven by both our Singaporean and Malaysian order book which stands at RM250 million at present. However, we think the revenue for Singapore would [outpace] our Malaysian business. For piling [works in Singapore], we believe demand is stronger than the capacity there,” he told reporters after the group’s annual general meeting yesterday.

The group’s Singaporean operations refers to Pintary International Pte Ltd, a Singapore-based piling contractor which the group had acquired on Aug 3, 2018 for S$5.6 million (RM16.91 million) from Pintary Holdings Pte Ltd, which is controlled by Chiu and his family.

Chiu shares that most of the group’s jobs in Singapore comprise jobs for the Housing and Development Board (HDB), the city state’s public housing authority whose over one million flats are home to over 80% of Singapore’s resident population.

“Singapore’s construction market now is strong in many areas, with [many] infrastructure jobs coming in. The government is also going strong on HDB jobs, and at the moment half our jobs in Singapore are HDB-related, so we see the Singaporean construction industry continuing to remain strong at least for the next two to three years” he said.

Pintaras Jaya reported a 57% year-on-year drop in net profit to RM15.52 million in FY18, while revenue had more than halved to RM95.91 million in FY18 from RM193.74 million in FY17.

However, it is worth noting that the group has more breathing room compared to some construction industry peers. As of June 2018, the group is in a net cash position of RM183 million, in addition to liquid assets (equities) worth about RM29 million. The group does not have any borrowings.

Chiu does not attribute this to any strategy, but said the group has been careful with how it controls its spending.

“I think it came about more from experience. In 1997 when we had the Asian financial crisis, we saw construction companies [with high borrowings] suffering, so we saw the value of not having debt, and it became a way of doing business.

“Also, when you are in a good financial position you get good rates from suppliers and sub-contractors,” he said.

Since the listing in 1994, Pintaras Jaya has paid dividends every year with an average annual payout ratio of 57%. In FY18, its dividend per share was 20 sen, which works out to an 8.7% yield based on its closing price of RM2.30 yesterday — its lowest point since February 2014, based on Bloomberg data — after falling three sen.

Its market capitalisation is RM381 million. Over the past one year, its share price has declined by approximately 37.5%.