KUALA LUMPUR (Jan 26): Vivocom Enterprise Sdn Bhd (VESB), a unit of Vivocom International Holdings Bhd (formerly Instacom Group Bhd), will be the main contractor for the construction of a residential development here dubbed 'Phase 5 Desa Tasik', for a contract value of RM230 million.

The development comprises 24 storeys of affordable homes, seven storeys of podium car park, and one storey of common facility, on a piece of vacant land that belongs to the city council, Dewan Bandaraya Kuala Lumpur.

In a bourse filing, Vivocom said VESB inked the heads of agreement (HoA) with Coneff Corp Sdn Bhd today to appoint VESB as the main contractor of the project, subject to the execution of definitive agreements.

"The definitive agreements are to be signed by Vivocom and Coneff Corp within six months from the date of this HoA, unless further extended by mutual agreement of the parties in writing," it said.

The cost and outlay to implement the project have not been fixed and shall be determined once the feasibility and due diligence reviews are completed, Vivocom said.

"Once determined, VESB will finance the cost and outlay by way of the internally generated funds and/or bank borrowings, as and when required," the group said.

The proposed development is expected to contribute positively to the future earnings of the group, it said.

In a statement, Vivocom said the HoA was in addition to a RM240 million contract from Coneff Corp announced last week, bringing its total projects from Coneff at Desa Tasik to potentially RM470 million, subject to final negotiations of the HoAs.

Vivocom said today's announcement meant it has potentially secured projects amounting to RM1.167 billion to date, including RM726.8 million from CRCC Malaysia Bhd.

"Vivocom has a strategic relationship with CRCC Malaysia, a subsidiary of China's construction behemoth China Railway Construction Corporation Ltd, and is their in-house contractor as well as their project delivery partner in Malaysia," it added.

Some of its recently awarded projects include a RM116 million project in Gombak, and two projects totalling RM378 million related to the 1Gateway project in Klang and 1Pavilion Hilltop in Mont Kiara, Kuala Lumpur.

"These projects, together with the company's current order book, are expected to give a strong earnings visibility until end-2017 and beyond. Vivocom currently has a project pipeline estimated at RM2.3 billion," it said.

Vivocom stocks closed 0.5 sen or 1.75% lower at 28 sen today, valuing it at RM693.07 million.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)