THE Naza group, which turns 40 this year, has been largely known as an automotive outfit, although over the past 10 years, it has also built a reputation as a property developer.
To put things into perspective, its property arm Naza TTDI has projects with an estimated gross development value of RM30 billion, which is large by any standard, while its automotive unit distributes the likes of Kia, Peugeot, Citroen and Chevrolet and has a thriving used-luxury vehicle business in Malaysia.
However, two new businesses could change the group’s profile significantly and give its earnings a boost. They are Naza Engineering and Construction Sdn Bhd (NEC), which, as its name suggests, is a construction company, and Premium Radius Sdn Bhd, which is involved in the R&D of telecommunications engineering solutions.
NEC is one of three shortlisted companies for the role of project delivery partner (PDP) in the RM9 billion LRT 3 project and is neck and neck with a joint venture between George Kent (M) Bhd and Malaysian Resources Corp Bhd and a standalone bid by Sunway Construction Group Bhd.
Meanwhile, Premium Radius, which is being rebranded, is bidding for about RM1 billion worth of work from the Malaysian Communications and Multimedia Commission (MCMC) for Phase 2 of the Universal Service Provision-TIME 3 extension. In this phase, towers, infrastructure, equipment and electronics related to public cellular service will be installed under the radio access network sharing technology across the country.
“We were too dependent on old businesses, automotive and property development,” explains S M Nasarudin S M Nasimuddin, joint group executive chairman of the Naza group, in an exclusive interview with digitalEdge Weekly.
While most pundits believe the George Kent-MRCB joint venture will bag the PDP job for LRT 3, Naza — in partnership with CSR Zhuzhou Electric Locomotive Co Ltd on a 70:30 basis — has made quite an impression in its maiden attempt at a large-scale construction project.
“We have been shortlisted with the big players; for us to be shortlisted, our documentation must be pretty good. Even if we lose the PDP job, there are individual packages that we can bid for,” Nasarudin points out.
Working in NEC-CSR Zhuzhou’s favour is that it has offered a financing package for LRT 3. While details of the package are scarce, rail construction players say the funding from the Chinese party is likely to save the government RM2 billion because the interest rate is as low as 3%. In comparison, a bond issue could have a coupon rate in excess of 4.3%.
Nasarudin says NEC is also aggressively bidding for jobs in the RM40 billion MRT 2 project. The outfit has put in tenders for all the packages, partnering Chinese giant Sinohydro for the RM12 billion tunnelling job and Japan’s Tekken Corp for the rail work, and on its own for the viaducts and stations.
The group will “eventually pursue the multi-billion-ringgit high-speed rail project linking Kuala Lumpur to Singapore”, Nasarudin adds.
At present, NEC’s order book stands at RM800 million with 70% of the jobs having been passed on by Naza TTDI.
Considering the company is bidding for all the MRT 2 packages, its tender book is in excess of RM40 billion.
While there is no hit rate for NEC as yet, Nasarudin, 32, has an internal target of winning at least RM1 billion of jobs next year. NEC does not contribute significantly to Naza TTDI at present.
In its financial year ended Dec 31, 2013, Naza TTDI posted an after-tax profit of RM94.2 million on revenue of almost RM1.4 billion. Its current assets stood at RM1.3 billion and its non-current assets at slightly more than RM1 billion. Long-term debt commitments were at RM936.8 million, short-term borrowings at RM692.2 million and reserves at RM485.2 million.
NEC may be a new player in the construction industry but Premium Radius has already been awarded a seven-year concession to put up small cell towers on strip poles in southern Kedah in partnership with state agencies. “We’ve been doing this for two years,” says Nasarudin, adding that he is confident of securing portions of the RM1 billion MCMC jobs that are up for grabs.
However, checks on the Companies Commission of Malaysia’s website did not reveal how profitable Premium Radius is as the information has yet to be updated.
The Naza group is often referred to as the largest privately owned conglomerate in Malaysia. While there was a plan to list the property arm as Naza TTDI Holdings Bhd, this did not materialise. “We explored it but the timing was not right,” comments Nasarudin. “But we could look at it in the future.”
If the two new businesses bear fruit, the group would be on an upward trajectory led by Nasarudin and his brother Faliq. The duo took up the reins of the company after their father, Tan Sri S M Nasimuddin S M Amin, died in May 2008.