Ahmad Zaki Resources sees improved bottom line for FY18

KUALA LUMPUR (June 29): Ahmad Zaki Resources Bhd (AZRB) is anticipating a positive outlook and an improved bottom line for the financial year ending Dec 31, 2018 (FY18), on the back of ongoing projects and better performance from its plantation division.

“We are looking at improving our divisions such as the loss-making division — plantation division — and also improving the bottom line of our oil and gas division,” its group managing director Datuk Sri Wan Zakariah Muda told reporters at a press conference after its annual general meeting here yesterday.

He noted that the construction division will still remain core to its performance, adding that AZRB will be seeing growth in terms of work volume for its construction division this year.

“Being in the industry for the past 36 years, we are very confident that we can actively and competitively participate in any new projects,” said Wan Zakariah, noting that he does not see any long-term impact from the change in government policies on the construction industry.

“We’re looking forward to announcements of new jobs coming up for tender. As a developing country, after our new government has completed its review on its existing megaprojects, there will be new [project] development announcements,” he added.

He noted that AZRB is bidding for new projects and hopes to be successful in one or two tenders, adding that its tender book is worth RM3 billion. It has an order book of RM3.6 billion, which will keep the company busy for the next two to three years.

Meanwhile, for its concession division, Wan Zakariah said everything is moving smoothly for the East Klang Valley Expressway project, which was already 45% completed. AZRB is targeting for its full completion by the end of next year.

For its plantation division, AZRB is hoping that its production figures will improve towards the second half of this year.

“We are also hoping that the plantation division this year will be able contribute positively to the group,” said Wan Zakariah, noting that the plantation division was still loss-making last year. However, for the first quarter of this year, it reported a positive earnings before interest, taxes, depreciation and amortisation (Ebitda).

In a filing with Bursa Malaysia last month, AZRB reported that the plantation division recorded an Ebitda excluding forex of RM2.55 million compared to a deficit of RM600,000 last year.

In FY17, the plantation division contributed about 7% to the company’s total revenue. Wan Zakariah said AZRB is expecting the revenue to double to about RM150 million, from RM70 million last year.

Additionally, for its property division, Wan Zakariah said the company has not launched and will not be launching any property developments this year, amid the softer housing market.

AZRB will be launching its Kwasa Damansara project next year; however, this depends on the condition of the housing market.

AZRB closed unchanged yesterday at 37.5 sen a share, giving it a market capitalisation of RM199.37 million.

The counter has fallen 65.45% from RM1.07 over the last year.

The new government’s review of mega projects sent the counter further south. Wan Zakariah said AZRB shares fell because of the sudden negative outlook for the construction sector, despite not being involved in any of the major projects that are currently under review.

Nevertheless, he said he is confident the outlook for the construction industry will be better going forward.

This article first appeared in The Edge Financial Daily, on June 29, 2018.

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