KUALA LUMPUR (Dec 15): Jaks Resources Bhd is aligning its business portfolio after the loss-making property development venture that was hit hard by the slowdown.

According to its chief financial officer Steven Ang, Jaks Resources will focus on construction and its power generation in Vietnam.

However, he said the group did not set a timeline to cease its property development business.

At its extraordinary general meeting (EGM) this morning, Jaks Resources shareholders have given the greenlight to dispose of four parcels of land measuring 5.99ha within the Sungai Penaga Industrial Park in Subang Jaya for RM167.59 million cash.

The land sale will translate into an estimated net gain of RM97.1 million. The proceeds from the exercise will be used mainly to pare down the group's debts by RM100 million and lower its gearing to a "comfortable level" of 0.6 times, said Ang.

"We have one last project, which is the Pacific Star mixed development in Section 13, Petaling Jaya. As for the disposal today (Subang Jaya lands), we are signalling to the market that our main focus will eventually be on the construction division and the Vietnam IPP (independent power producer)," Ang told reporters after the EGM.

Ang said the completion of the Pacific Star — which is expected to be by 2018 — has been delayed due to "various elements" including weak market sentiment.

"We have one more year to complete Pacific Star. Besides that, we have no more property projects in our pipeline. The direction that we are going is towards the Vietnam IPP and construction. Once Pacific Star is completed, it's the end (for the property development division)," Ang added.

Ang said Jaks Resources is still working to dispose of its Evolve Concept Mall in Ara Damansara, citing weak market conditions as among the reasons for its difficulty in securing a buyer.

"The mall has a take-up rate of 65% today. Of course, we would still continue collecting rental from tenants. It is still hard to find a genuine buyer [for the mall] as financing is still an issue, market is still weak and sentiment is still low," Ang explained.

"[Essentially,] our intention is to go into asset-light model," he added.

In Vietnam, Jaks Resources is involved in a US$1.87 billion 1,200MW build-operate-transfer (BOT) coal-fired thermal power plant project in Hai Duong, together with integrated power engineering service provider China Power Engineering Consulting Group Co Ltd (CPECC). The joint venture involves Jaks Resources holding 30% share while the remaining 70% is held by CPECC.

According to Ang, Jaks Resources currently recognises about 80% of its overall group profit from the construction of the Vietnam power plant, which it expects to be completed and begin operations in 2020.

Apart from its Vietnam venture, Jaks Resources will continue tendering for Malaysia-based construction projects in areas "we know we are good at" including sewerage and road infrastructure. This, said Ang, means Jaks Resources is not eyeing transit-oriented projects such as the Mass Rapid Transit Corp (MRT) and Light Rail Transit (LRT) packages.

As of September this year, the group has an outstanding orderbook of RM850 million for local construction jobs alone. Including the Vietnam IPP, Jaks Resources is committed to RM2.6 billion worth of projects.

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