KUALA LUMPUR: Taliworks Corp Bhd said its new tie-up with the Employees Provident Fund (EPF) in a special-purpose joint-venture (JV) company, Pinggiran Infrastructure Sdn Bhd, is a strategic move by the group to move its operating infrastructure into key, developed markets.

“The sale to EPF is to bring together a strategic investor who will be able to collaborate with Taliworks to grow the operating infrastructure projects and regulated businesses in several identified developed markets through the JV company.

“The sale proceeds will substantially be used to grow this business segment,” its executive director Ronnie Lim Yew Boon told The Edge Financial Daily in an email interview recently.

Last month, Taliworks announced that it had sold a 31.85% indirect stake in Taliwork’s Cerah Sama Sdn Bhd, which owns Grand Saga Sdn Bhd, the concession-holder of the 11.5km Cheras-Kajang Highway, to the EPF for RM68.68 million cash.

This saw Taliwork’s stake in Cerah Sama being reduced from 55% to 23.15%; the other shareholder of Cerah Sama is Singapore-based South East Asian Strategic Asset Funds LP.

Grand Saga, via its 84.62%-owned subsidiary Pinggiran Muhibbah Sdn Bhd, had signed a share sale and purchase agreement (SSPA) with the EPF to dispose of its entire equity interest in Pinggiran Ventures Sdn Bhd, which owns a 49% equity interest in Pinggiran Infrastructure.

The SSPA sets out the basis for Taliworks to partner with the EPF on a 51%:49% basis in JV vehicle Pinggiran Infrastructure, whose seed asset is a 65% effective equity interest in Cerah Sama.

Lim said Taliworks has just commenced works for a RM30.63 million job to supply and install 1,200mm-diameter steel pipes awarded by Unit Perancang Ekonomi Negeri Selangor, and which is due for completion in July 2015.

“We are currently bidding for other infrastructure projects, which will be announced if we have been successfully awarded any of them,” he said, adding that its construction tender book currently stands at about RM600 million.

As for Taliwork’s RM339 million Mengkuang dam expansion project awarded by the federal government in 2011 — of which it is a sub-contractor —  he said it is currently 56% completed.

In its second quarter ended June 30, 2014 (2QFY14) results, Taliworks noted that revenue in the construction segment declined sharply by 27% to RM21.5 million from RM29.5 million, largely due to lower completion rate recognised in the ongoing dam expansion project.

However, Lim assured that the project, which involves earth-filled dam embankments and river diversion tunnel activities, is “on schedule”.

“We have only two ongoing construction projects. How we will perform in this segment for the rest of the year would depend on the actual progress of the construction, as we recognise our results based on the percentage of completion.

“The actual progress is on schedule but could also be affected by external factors such as the weather and performance of other contractors,” he said.  

In 2QFY14, Taliworks’ net profit rose 32% to RM12.69 million from RM9.6 million a year ago, while revenue grew 3.9% to RM81.8 million from RM78.7 million.

The group expects its full FY14 to see another revenue growth, primarily from “the water treatment, supply and distribution segment” due to increases in tariff rates and higher production. But it said there are no particular targets set “as we are highly involved in concession-based businesses”, said Lim.

Taliworks’ shares rose 39.29% to RM1.95 last Friday from RM1.40 a month ago, giving it a market capitalisation of RM851.16 million.


This article first appeared in The Edge Financial Daily, on September 29, 2014.