This article first appeared in The Edge Financial Daily, on November 23, 2015.
KUALA LUMPUR: Gadang Holdings Bhd is confident its construction order book could pass the RM1 billion threshold in financial year ending May 31, 2016 (FY16).
“As at October, our remaining order book is already RM874.4 million, so we are quite confident that we can surpass the RM1 billion level,” Gadang Engineering (M) Sdn Bhd managing director (MD) Khew Check Kiet told The Edge Financial Daily.
Gadang Engineering is a wholly-owned subsidiary of Gadang Holdings whose core businesses are civil engineering, building construction and provision of engineering works for mechanical and electrical services. It is also involved in property development, water concession and oil palm cultivation.
“On the Rapid (Petroliam Nasional Bhd’s refinery and petrochemical integrated development project) side, there are another five packages that we have tendered for, and the EKVE (East Klang Valley Expressway) we have put up three tenders, and for MRT (mass rapid transit) Line Two, we are submitting our tender next month,” Khew revealed.
“The other projects that we are looking at are the LRT (light rail transit) Line Three, and some other highways like the WCE (West Coast Expressway), which we understand that there are six packages remaining for tender,” he said.
On Gadang Holdings’ property development division, Gadang Land Sdn Bhd’s managing director Datuk Ling Hock Hing said the group currently has projects worth some RM2.36 billion in the pipeline.
For ongoing projects, Ling said the group’s Salak South condominium development has secured 68% and 30% sales for phase one and two respectively, while its Johor Baru’s Capital City integrated development has achieved 42% sales for phase one’s retail lots.
“We will continue to source for additional land bank, but the area that we are looking at will largely remain in the Klang Valley,” he said.
“There is also another development with (Selangor) Menteri Besar Incorporated, whereby we are invited to submit a proposal,” Ling revealed, but did not disclose details of the project.
In terms of the utilities businesses, Gadang Holdings executive director-cum-chief financial officer Kok Pei Ling said the group’s nine-megawatt mini hydro power concession in Indonesia is currently still in the construction stage, therefore contribution may only begin in FY17.
“As for our water concession in Indonesia, we recently started a new plant, so we would see better contribution from FY16,” she said.
Kok said that at group level, the management is positive on Gadang Holdings’ outlook and expects a better performance in FY16.
In its first quarter ended Aug 31, 2016 (1QFY16), Gadang Holdings doubled its net profit to RM20.86 million from RM9.54 million a year ago backed by revenue of RM149.38 million.
Kok noted that the type of projects or construction jobs Gadang Holdings secured had helped in improving the group’s financial results.
“Of course when we tender for project, we will ensure that the margin that we can get from it is attractive enough,” she said, adding that Gadang Holdings will not make a tender for the sake of occupying market share.
“The fundamental of the group is good, and I believe it would be better moving forward,” Kok also said.
Asked if Gadang Holdings would consider undertaking a share split exercise, as its share price has appreciated 36.23% year to date, Kok said the group has no such plan at this juncture.
“We have been getting some of our shareholders’ requests (on share split), we will consider, but at the moment, no,” she added.
Gadang Holdings (fundamental: 1.7; valuation: 1.8)’s share price closed two sen or 1.06% lower at RM1.86 last Friday, giving it a market capitalisation of RM437.3 million.