Better earnings ahead for ML Global after MITC buy, says MD

PETALING JAYA (Nov 29): ML Global Bhd should see better earnings ahead after consolidating MITC Engineering Sdn Bhd’s business into the company, according to ML Global managing director (MD) Tan Sri Lim Hock San.

“After completing everything (the acquisition), of course ML Global is expected to have better revenue and earnings,” Lim told reporters after the group’s extraordinary general meeting yesterday as ML Global shareholders approved the proposal to acquire MITC Engineering’s entire equity interest for RM300 million.

He said ML Global is currently bidding for local construction projects worth RM928 million, comprising jobs from LBS Bina Group Bhd and government projects.

The construction company also has an order book of about RM1.61 billion, which can last for two years, 60% of which comes from LBS Bina, which owns 56% of ML Global.

Lim, who is also the MD of property developer LBS Bina, said ML Global can bank on the growth of LBS Bina.

“LBS Bina has garnered RM1.173 billion in sales so far this year. Unbilled sales as at Nov 23 were RM1.45 billion,” he said.

Lim said ML Global’s earnings visibility had also garnered interest of institutional investors.

“Many funds are keen on ML Global shares. They have confidence [in us and believe] we can do better,” he added.

ML Global will also be eyeing opportunities to be the turnkey contractor for property projects, which have better profit margins.

“We can help other smaller developers that need funding. Our reputation can also help garner sales faster,” he noted.

Lim forecasts that the construction sector would be robust next year as he expects more government jobs to be churned out following Prime Minister Datuk Seri Najib Razak’s official visit to China.

In the third quarter ended Sept 30, 2016, ML Global posted a net profit of RM1.94 million, relatively unchanged from the RM1.93 million it achieved a year ago, mainly due to other income arising from the gain on disposal of property, plant and equipment. Revenue for the quarter, however, fell 11% to RM9.55 million from RM10.78 million.

For the nine-month period, ML Global’s net profit grew 8% to RM2.99 million from RM2.77 million, while revenue rose 52% to RM31.87 million from RM20.71 million.

In September, LBS Bina announced plans to streamline its construction business under its subsidiary ML Global via the disposal of its indirect 75% stake in MITC Engineering to ML Global.

LBS Bina said then that it was part of the group’s plan to streamline its construction businesses under ML Global and the latter’s subsidiaries and MITC Engineering for greater operational and financial efficiency.

This article first appeared in The Edge Financial Daily, on Nov 29, 2016. Subscribe to The Edge Financial Daily here.