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Kerjaya Prospek-Gamuda JV wins RM203m contract from E&O

KUALA LUMPUR (April 26): A joint venture (JV) comprising Kerjaya Prospek Group Bhd and Gamuda Bhd has won a RM202.6 million contract from Eastern & Oriental Bhd (E&O) to build a sea link between Jalan Gurney and the Seri Tanjung Pinang (phase two) development (STP2 Island).

In a bourse filing, Kerjaya Prospek said an unincorporated JV between its wholly-owned unit Kerjaya Prospek (M) Sdn Bhd (KPM) and Gamuda's unit Gamuda Engineering Sdn Bhd won the contract from Tanjung Pinang Development Sdn Bhd, which is an indirect subsidiary of E&O.

Kerjaya Prospek explained that the contract covers the execution and completion of infrastructure works which consist of the Gurney Marine Bridge between Jalan Gurney and the STP2 Island, and upgrade of a 55.47m wide main road from the Gurney Marine Bridge to the Gurney roundabout. This is on top of any other associated civil engineering works proposed for the STP2 development as well.

The contract is expected to provide an additional revenue stream for Kerjaya Prospek over the next two to three years.

"The acceptance of the contract is in the ordinary course of business of KPM and is undertaken on an arm's-length basis, based on normal commercial terms which are not more favourable than those generally available to the public," it noted.

The contract is deemed to be a recurrent related party transaction of a revenue or trading nature due to the Tee family's involvement in both Kerjaya Prospek and E&O.

Datuk Tee Eng Ho is Kerjaya Prospek's executive chairman, while his wife Datin Toh Siew Chuon and brother Tee Eng Seng are executive directors, with the three serving as indirect major shareholders of E&O through their vehicle Amazing Parade Sdn Bhd.

On March 26, Amazing Parade proposed to acquire the remaining 820.08 million shares of 57.29% stake it did not own in E&O for 60 sen apiece. Amazing Parade had bought a 10.89% stake from Sime Darby Bhd for 60 sen apiece or RM93.5 million — resulting in its shareholding increasing to 42.71% from 31.82%. Eng Ho sits on E&O's board as a non-independent and non-executive director.

Kerjaya Prospek noted that its unincorporated JV with Gamuda is done with 50-50 participation. This means that the cost and profit will be shared equally.

It noted that KPM will fund its portion of the contract's cost via internally generated funds.

The contract is expected to start on May 4 and will take 30 months to complete.

Kerjaya Prospek said the contract will further increase its existing order book.

"We are very delighted to have secured the sixth infrastructure contract since 2016. In fact, this is the second bridge project after the completion of the marine bridge crossing the sea linking Jalan Seri Tanjung Pinang on the Penang Island with the STP2 Island."

"We expect this contract to contribute positively to the earnings and net assets per share for the financial years 2021 to 2023," Eng Ho said in a separate statement.

In a separate bourse filing made by E&O today, it was announced that Amazing Parade now controls a 38.32% stake or 548.44 million shares, after it purchased 5.81 million shares on April 23.

Shares in Kerjaya Prospek closed 3.01% or four sen higher at RM1.37, valuing it at RM1.7 billion. E&O shares finished 0.83% or half a sen higher at 60.5 sen, yielding a market capitalisation of RM881.45 million.

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