Bina Puri sees lower construction revenue this year

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KUALA LUMPUR: Bina Puri Holdings Bhd expects to see lower revenue from its construction segment — its major turnover contributor — for the financial year ending Dec 31, 2014 (FY14), as several projects including klia2 have been completed while new contracts awarded cannot be billed much initially.

For FY13, its construction segment recorded RM858.4 million in revenue and RM7.36 million in profit before tax (PBT), accounting for 81.5% and 54% of group revenue and PBT respectively, both of which are lower than in FY12.

“Construction revenue will be slightly lower than last year’s as the klia2 project has been completed already. Also, some projects that were just awarded are at the commencement stage, thus the progress billing may not be that much,” group executive director Matthew Tee told reporters after the group’s extraordinary general meeting (EGM) yesterday.

“We will continue to tender [for projects]. We are tendering about RM10 billion worth of projects every year, with a strike rate of 10%,” he said.

While construction will remain the main driver of the group’s performance moving forward, Tee said the group is trying to be less dependent on it as the sector’s contribution to revenue will be reduced to 40% to 50% in the next five years. The business is cyclical and offers only razor-thin margins.

In the first half of this year (1HFY14), construction revenue stood at RM442.8 million, or about 81.5%, similar to FY13’s full year.

Tee said Bina Puri currently has projects worth RM2.9 billion in gross development value lined up in the Klang Valley, the southern and eastern region, Sabah, Sarawak and Thailand, which should last the group over the next five years.

“We have launched some this year but most launches will come on board next year. Some developments have been approved while some are at the tail-end of approval,” he said.

The group will continue to build up its recurring income segments: power supply and highway concessions.

Group managing director Tan Sri Tee Hock Seng said it is “eyeing” more power plants, but declined to elaborate.

He said the group will have 30mw of power plants up and running in Indonesia next year when its new 4.2mw mini hydropower plant in Banteng, South Sulawesi, is completed in May.

This article first appeared in The Edge Financial Daily, on October 9, 2014.