SCH banks on highway job to soften impact of slowing property market

KUALA LUMPUR: Quarry equipment distributor SCH Group Bhd’s revenue may decline 20% in the current financial year ending Aug 31, 2016 (FY16) due to the property market slowdown, according to its managing director cum deputy chairman Lau Mong Ling.

Lau said the slowdown has already impacted SCH’s business. He, however, said SCH is hopeful that the Pan Borneo Highway project will support SCH’s business.

“Revenue may slowdown about 20% [this financial year], but hopefully the Pan Borneo Highway project will help to improve the situation,” he told reporters after SCH’s annual general meeting yesterday.

Notwithstanding the property market slowdown, Lau said the construction sector will still be robust, with the announcement of government projects like the mass rapid transit line 2 (MRT 2), light rail transit 3 (LRT 3), the Pan Borneo Highway contracts, and eventually the Kuala Lumpur-Singapore high speed rail.

As such, he believes the construction sector will still be robust for the next 15 to 20 years.

Meanwhile, SCH chief marketing officer Danny Lim said the group had already started its operations in Phnom Penh, Cambodia, and is waiting for approvals from the country’s commerce ministry on the applications for its business licence and work permits for its staff.

He said the company will focus on the reconditioned quarry machinery business in Cambodia and had identified some customers there.

Lau added that the business is still at its preliminary stage in Cambodia, and that the group is careful about its investments there.

He pointed out that the group will continue to look at expanding its business in the Asean region in the future, and it is eyeing countries like Myanmar, Laos and Thailand.

Media reports, quoting data from Cambodia’s Land Management, Urban Planning, and Construction Ministry, previously noted that investment in the construction sector there reached an all-time high last year at almost US$3.5 billion (RM15.05 billion), up about 40% from the US$2.5 billion investments recorded by the sector in 2014.

Further, SCH, which currently has no dividend policy, wants to declare “at least half a sen” of dividend in FY16, depending on its profit, said Lau. It declared a 1.5 sen dividend in FY15.

The group, which was in a net cash position as at the end-FY15 with RM11.91 million cash and cash equivalents, saw its net profit fall 10.15% in FY15 to RM6.46 million, as revenue declined 8.82% to RM59.65 million from RM65.42 million. It chalked up RM7.19 million in FY14.

SCH’s main customers include YTL Corp Bhd, Sunway Bhd and Lafarge Malaysia Bhd. SCH shares ended the trading session yesterday at 0.21 sen, which valued the company at RM84.51 million.

SCH shares closed unchanged at 20.5 sen yesterday, valuing it at RM84.51 million.