KUALA LUMPUR: Pesona Metro Holdings Bhd is targeting 8% to 10% revenue growth this year from both government and private sector projects, despite what it says will be a “tougher” construction market due to heightened competition that will see its margin “a little squeezed”.
The construction group saw a 4.7% decline in revenue to RM205.86 million for the nine months ended Sept 30, 2014 (9MFY14), from RM215.91 million a year ago. Consequently, net profit dropped by more than half to RM5 million from RM11.66 million in 9MFY13.
Pesona Metro chairman Datuk Lee Tuck Fook said the company is looking to reduce its dependence on the construction sector and is looking for recurring income to stabilise its earnings.
“A number of M&A (merger and acquisition) opportunities have been presented to us, which we are currently evaluating and will put forward to our shareholders as soon as we have completed our evaluation,” said Lee after the company’s extraordinary general meeting yesterday.
At the meeting, all resolutions were approved by its shareholders, including the acquisition of SEP Resources (M) Sdn Bhd for RM29.15 million, and a 2-for-1 warrants issue of up to 274.85 million. Pesona Metro director Wie Hock Kiong said the construction industry is facing more intense competition, hence margin will be squeezed even though oil prices are low.
“If oil prices continue to maintain at this level, we expect building material prices to come down. But we are not seeing the impact at this moment,” he said, adding that its margins will improve when the effect sets in.
Pesona Metro currently has an order book of RM500 million from six projects, which will last it for about two years. It has a tender book of over RM1 billion.
“We’ve also tendered for infrastructure projects and would like to strike a balance of 40:60 with 40% for infrastructure projects and the remaining 60% on building projects,” said Lee.
He added that all the company’s projects are currently local and the group does not have plans to expand overseas for now. Lee, meanwhile, expects Pesona Metro’s project to design and build a bridge across the railway at Port Klang to be completed in the third quarter of this year.
“As for dividends, so long as the company is profitable and cash requirements allow it, our intention is to continue to declare dividends,” he said, adding that the board is currently deliberating on a dividend policy for its shareholders. Pesona Metro closed 3 sen higher at 89.5 sen yesterday, giving it a market capitalisation of RM459.18 million.
This article first appeared in The Edge Financial Daily, on January 8, 2015.