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This article first appeared in The Edge Financial Daily, on January 21, 2016.

 

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KUALA LUMPUR: Fututech Bhd, which is on the lookout for merger and acquisition deals amid a sluggish economic environment, plans to expand into the piling works segment.

Stressing the group is still shopping for a potential target, its executive chairman Datuk Tee Eng Ho said “now is a good time to buy”, referring to signs of consolidation in the property and construction sectors.

“After the corporate exercise, Fututech will become a bigger firm, and I think we have solid cash to acquire [other] companies or expand by our own.

“For me, if they (the targeted companies) are good, then I have no problem to buy it [over]. But I try not to buy [a] 100% stake in the company and will acquire a substantial stake of up to [a] 70% stake,” Eng Ho told pressmen after the group’s extraordinary general meeting (EGM) yesterday.

Interestingly, several board members of Fututech have surfaced as the second-largest shareholder of GSB Group Bhd in December last year via Javawana Sdn Bhd, a special purpose vehicle controlled by Datin Toh Siew Chuon, Tee Eng Han and Tee Eng Tiong.

Javawana has subscribed to 88 million shares or a 16.67% stake through a private placement on Dec 16 last year.

Toh, who is married to Eng Ho, is an executive director of Fututech.

Earlier in the EGM, Fututech’s shareholders unanimously passed five resolutions, including the proposed acquisitions of Kerjaya Prospek Sdn Bhd and Permatang Bakti Sdn Bhd by Fututech for RM458 million.

Upon completion, Fututech will change its name to Kerjaya Prospek Group Bhd.

The acquisitions will see the group venturing into the construction sector.

Elaborating on its business strategy going forward, Eng Ho said Fututech plans to diversify into piling and foundation jobs to widen its income stream.

It is main income contributor is the kitchen cabinet manufacturing business, followed by property development.

“We have bagged a total of RM30 million worth of pilling works last year, including the latest winning of RM15.7 million on Dec 15,” he said.

Eng Ho added that the group is also eyeing to expand its footprint overseas by tapping its three major clients’ presence in the countries they operate in.

Fututech’s three major clients are S P Setia Bhd, Eco World Group Development Bhd and Eastern & Oriental Bhd, which give it a presence in Johor, the Klang Valley, Selangor, and Penang.

“We are unfazed by the current property market downturn as we have evened out our risk into three different regions,” he added.

Eng Ho expects the group to secure construction jobs worth at least RM600 million in the current financial year ending Dec 31, 2016, out of its current tender book of RM1.17 billion.

“We are confident of securing at least RM600 million worth of construction works, based on our previous track record,” Eng Ho said, adding that the group’s success rate is about 30% to 40%.

According to him, Fututech’s current order book stands at RM2.7 billion, which could support its earnings until 2018.

With the strong order book and tender book, Eng Ho is confident that Fututech could achieve double-digit growth in its bottom line in FY16.

On whether Fututech is looking for a new chief executive officer (CEO), he said: “This is not an issue. Everything [is] business as usual and I am running the show.”

“Further, upon completion of the acquisitions [of Kerjaya Prospek and Permatang Bakti], Fututech will grow into a bigger company, so it is not a concern,” he added.

Evan Loo Soo Long resigned as Fututech CEO on Dec 11 last year to pursue other career opportunities after helming the group for five years.

On the federal government’s move to revise Budget 2016, Eng Ho said any expenditure cut would have no impact on the group.

“Most of our projects are from [the] private sector. If we win public jobs, this is a plus for us,” he added.

Shares in Fututech closed one sen lower at RM1.74 yesterday, with a market capitalisation of RM158.15 million.

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