This article first appeared in The Edge Financial Daily, on March 23, 2016.
Zecon Bhd (+ve)
SHARES of Zecon Bhd (fundamental: 0.35/3; valuation: 0.3/3) rose by 3.8% or 3 sen to 82 sen yesterday, with a relatively high volume of 2 million shares. In comparison, its 200-days average volume is only about 124,897.
Zecon is principally involved in construction, infrastructure, toll concession and property development.
On Monday (March 21), its board of directors announced that the group had acquired two ordinary shares of RM1 each, representing 100% of the equity interest in Zecon Space Sdn Bhd, for RM2, cash.
Zecon Space was incorporated on March 9 this year and its principal activities are to carry out the business of education consultancy and conduct training — professional and pre-professional courses, in-house courses, public seminars, workshops and conferences, academic programmes and other programmes — related to the nature of the business of the company.
Zecon Space has yet to commence business since incorporation.
In a bourse filing, Zecon said the acquisition of Zecon Space will not have any impact on the group’s earnings and net assets for financial year ended 30 June 2017, as well as the share capital and major shareholders’ shareholding.
Zecon also announced that the Zecon Bhd-Kim Lun Sdn Bhd joint venture (JV) had received the Letter of Award (LoA) from Lebuhraya Borneo Utara Sdn Bhd for the proposed development and upgrading of Pan Borneo Highway in the state of Sarawak, Malaysia (Phase 1: Serian Roundabout to Pantu Junction) for a contract worth RM1.461 billion.
The duration of the contract is for 48 months from the date of the LoA. Zecon has 30% of the JV and a JV company will be incorporated to undertake the contract as part of the conditions imposed in the tender for the contract.
The Pan Borneo Highway contract is expected to contribute positively to Zecon Group’s earnings during the tenure of the contract.