KUALA LUMPUR (March 5): Building construction firm GDB Holdings Bhd, which has seen rapid growth since its establishment in 2013, needs fresh capital for expansion. For that, it has decided to tap the equity market and list on the Ace Market of Bursa Malaysia.
“To us, we can’t wait for a good time, we need funds for our expansion programme. Therefore, we need to do it soon,” said its managing director Cheah Ham Cheia, adding that the listing will be good for the company as it helps to up its reputation or profile as well as get itself ready for the next property boom when it happens.
Spearheaded by Cheah, who was the former group CEO of Putrajaya Perdana Bhd and also its executive director Alexander Lo Tzone Leong, former chief operating officer of Putrajaya Perdana’s construction arm Putra Perdana Construction Sdn Bhd, GDB provides construction services mainly for high rise residential, commercial and mixed development buildings.
Leveraging on the duo’s experience, the company has been securing major construction projects ranging between RM186.6 million and RM432 million, excluding the RM2.4 million BBCC show units project.
To cope with its expansion plans, Cheah expressed that the company needs to raise funds mainly for capital expenditure.
In its draft initial public offering (IPO) prospectus, the group said it plans to allocate 63.7% of its IPO proceeds to purchase new construction machinery and equipment, as well as a new office and land for storage in Selangor.
Commenting on the property market, Cheah pointed out that GDB “does not feel” that there is an overhang in the property market, and sees demand for properties as the KL population continues to grow.
“In our case, we have actually receive a lot of invitation [to tender for construction projects] and there’s so much that we have to turn many down.
For the financial year ended Dec 31, 2016 (FY16), GDB reported a net profit of RM14.24 million, nearly tripled, from RM5.03 million in FY15. The company registered about 119.27% increase in net profit between FY14 and FY15.
The company’s revenue stood at RM276.91 million, RM169.54 million and RM86.63 million in FY16, FY15 and FY14 respectively.
“Of course, we don’t expect to see [earnings to] double every year, but prospects are looking very positive with the growing orderbook figures,” said Cheah.
As of Aug 30, 2017, GDB’s balance orderbook stood at RM696 million, which will keep the company busy till 2020, while its tenderbook is at RM1.28 billion. Cheah noted that the company has a success rate of between 15% and 20%, and will continue to tender.
According to its website, GDB has completed construction works for several projects in Kuala Lumpur, namely KL Eco City (Parcel B) and One Central Park, and is currently working on several high value projects including Westside III, Etiqa Office Tower, AIRA Residence and Menara Hap Seng 3.
With the BIM (building information modeling) system and industrialised building system (IBS), Cheah said GDB has been completing all its projects ahead of schedule. The good track record helps to bring in new clients.
Cheah said the BIM system is to monitor the productivity and problems of its construction process to support decision making, and implementing IBS helps GDB on the speed, quality and tidiness, which in turn creates an indirect savings for the company by reducing its overhead expenditure.
In fact, Cheah noted that Singapore has made it mandatory for its construction players to use this BIM software, while the Malaysian government had made BIM mandatory for public construction projects worth above RM100 million by 2019.
As such, with BIM system and IBS, Cheah said GDB has been selective in choosing its clients — who are prepared to pay for the quality services the company provides.
Moving forward, GDB is also seeking to extend its services to participate in the construction of hospitals, schools or universities and shopping malls.
Cheah noted that GDB will also be expanding into infrastructure projects within a year of listing and is in the midst of sourcing the team for this department. “In terms of experience, I, myself, have done quite a lot of infrastructure projects like KL interchanges, and the Federal Highway,” he added.
This article first appeared in The Edge Financial Daily, on March 5, 2018.