KUALA LUMPUR (Jan 30): Sunway Construction Group Bhd (SunCon) is partnering Singapore-listed Hong Leong Asia Ltd to jointly tender for the lease of a piece of land in Singapore from Singapore's Building and Construction Authority (BCA).

If successful, the two companies plan to develop the land for the manufacture and sale of precast concrete building components.

SunCon said the proposed joint venture (JV) will benefit the group in the long run as it will further improve its productivity and reduce reliance on foreign workers, as well as further cement the group's presence in Singapore.

In a filing with Bursa Malaysia today, SunCon said its indirect wholly-owned subsidiary Sunway Concrete Products (S) Pte Ltd (SCPS) has entered into an agreement with Hong Leong Asia's precast concrete unit HL Building Materials Pte Ltd for the JV.

The principal activities of the JV company, HL-Sunway JV Pte Ltd, are manufacturing and sale of precast concrete components. SCPS will have a 49% stake in the JV company and HL Building Materials the remaining 51%.

"The JV company will submit the bid for the tender to carry out and complete the tender," said SunCon.

"If the bid for the tender is successful, the JV company will enter into the lease agreement and the building agreement with the BCA. Thereafter, the JV company will develop and occupy the bidded land for the purposes of the respective businesses of HL Building Materials and SCPS," it added.

SunCon said the JV will also enable the mechanisation of the existing precast method versus the present open yard concept to elevate the group to be on par with best industry practice.

"SCPS will fund its share of the equity participation in the JV company through internal funds for the lease of land in addition to some external borrowing to finance the building of the mechanised plant," said SunCon.

"SunCon is confident that the proposed JV is the right direction to take to maintain its position in this industry, which has brought the group good margins thus far," it added.

The proposed JV is expected to contribute positively to the future earnings of SunCon.

SunCon shares closed unchanged at RM2.56 today, with a market capitalisation of RM3.295 billion.