KUALA LUMPUR (Nov 28): Ekovest Bhd, which was seen as close to the previous Barisan Nasional-led government, is positive that it will remain profitable in the near term, supported by its healthy outstanding construction order book of RM3 billion, despite the change of government after the 14th general election (GE14) on May 9.
The group is now eyeing a slice of the record RM11.91 billion budget the Sarawak state government is planning to spend, the bulk or some RM9.07 billion of it for development.
The RM3 billion outstanding construction order book includes contracts for the Setiawangsa–Pantai Expressway (SPE or better known as DUKE Phase 3) and the various beautification packages under the River of Life project, which the group said should be able to provide earnings visibility for up to three years.
Ekovest is expected to release its financial results for the first financial quarter ended Sept 30, 2018 (1QFY19) on Friday.
“We hope 2019 will be a good year for us. We still have RM3 billion in the order book to be done. Apart from this, we are tendering jobs in Sarawak ... we hope to get a slice of [the] Sarawak [state government’s spending],” its managing director Tan Sri Lim Keng Cheng told reporters after Ekovest’s annual general meeting yesterday.
Lim said Ekovest’s tender book now stands at about RM6 billion, of which up to about RM4 billion involves projects from Sabah and Sarawak, while those from Kuala Lumpur make up the rest.
“We have already got a letter from Sarawak confirming [that] we are qualified to tender for projects there, and we just received an invitation from the state to bid for five work packages,” Lim said, adding that they are mostly related to the state’s infrastructure projects.
For the property segment, Lim said Ekovest’s latest mixed project — EkoCheras — will provide positive contributions to the company going forward. The project was launched in 2013 and comprises three residential blocks, one office tower, one hotel and a shopping mall.
Lim said the mall has been well received since its soft opening in September this year, and that Ekovest expects it to provide a recurring income stream to the group in the future. To date, the mall has a committed occupancy rate of 85%.
Going forward, Lim said Ekovest is looking into setting up a real estate investment trust in three to four years once “we think [the shopping mall] is fully tenanted”.
“The potential revenue coming from the rental of the shopping mall — that is a very good future business for Ekovest,” Lim said.
On new property projects, Lim said Ekovest expects to launch them only after July next year as the group needs time to get a clearer picture of the market.
Currently, its property segment has unbilled sales of RM200 million to RM250 million, mainly derived from EkoCheras as well as EkoTitiwangsa.
On the new government post-GE14, Lim said: “We have no problem working with the new government. In fact, we are happier with the new government as the direction is very clear.”
As example, Lim said the group is exploring suitable residential products where prices can be lowered following the exemption of the sales and services tax on construction services.
Ekovest shares slipped 0.5 sen or 1.03% to close at 48 sen yesterday, valuing the company at RM1.04 billion. The stock has shrunk about 41% from 81 sen on May 8.
This article first appeared in The Edge Financial Daily, on Nov 28, 2018.