KUALA LUMPUR: LGB Taliworks Consortium Sdn Bhd (LGBTC), the joint venture company of Taliworks Corp Bhd and LGB Engineering Sdn Bhd (LGBE), has been awarded a RM75.87 million contract to construct and complete a 92 million litre balancing reservoir for the proposed Langat 2 Water Treatment Plant and Water Reticulation System in Selangor.

In Taliworks filing to Bursa Malaysia today, Taliworks said the contract was awarded by the federal government’s Pengurusan Aset Air Bhd (PAAB) to LGBTC, in which it owns a 20% stake, via a letter of acceptance dated Sept 28, received today.

The estimated time frame for the contract is 27 months. LGBE and Taliworks entered into a joint venture agreement today expressly to undertake and complete the works in relation to the Langat 2 project.

Subject to the approval of PAAB, LGBTC shall sub-contract 70% of the works to Taliworks’ unit, Taliworks Construction Sdn Bhd. The shareholders’ mandate related to the sub-contract works had been obtained at a recent annual general meeting of Taliworks.

LGBTC, in which LGBE holds the remainder 80% equity, was incorporated on Sept 23. It has an authorised share capital of RM1 million, comprising 1 million shares of RM1 each, and an issued and paid-up share capital of the same. The shareholders of LGBTC (Taliworks and LGBE) have undertaken to increase the eventual issued and paid-up share capital of LGBTC up to RM4 million.

Taliworks is ready to inject up to RM800,000 to maintain its stake in the company, its filing showed. 

“The JVA will encourage Taliworks’ participation with LGBE, in respect of future opportunities in the construction of civil engineering works in water supply projects.
 
The project is not expected to contribute materially to the earnings of the group for the financial year ending Dec 31, 2015, as it is still in the early stages of mobilisation and planning. However, it is expected to contribute positively to the future earnings of the group.

“The directors of Taliworks (save and except for interested directors) are of the opinion that the terms of the JVA are fair and reasonable, and are in the best interest of the Company,” it said.
 
Taliworks (fundamental: 2.4; valuation: 1.5) said that its director Lim Chin Sean and Datuk Lim Chee Meng who are substantial shareholders of the company, are deemed to be interested by virtue of their directorship and direct shareholdings in LGBE.
 
Taliworks, which is also in the midst of talks with Silk Holdings Bhd to buy the latter's 33-year concession of the Kajang Silk Highway that is ending in 2037,  closed unchanged at RM3.48 today, for a market capitalisation of RM1.53 billion. Year-to-date, the stock has gained about 78.5%, from RM1.95.

(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.)