KUALA LUMPUR (Sept 29): Midsize property developer Brem Holding Bhd, which is expecting the financial year ending March 31, 2016 (FY16) to see flat year-on-year earnings growth, said its civil engineering and construction segment would drive the company’s earnings going forward as its property segment faces a slowdown in sales.
Brem non-independent non-executive director Low U Hwa told The Edge Financial Daily yesterday the civil engineering and construction segment had an outstanding order book of RM300 million — mostly governmental jobs — which could support its earnings for the next two years.
“We expect this segment to contribute at least 60% of our top line for FY16,” he said after the group’s annual general meeting yesterday.
In FY15, the group saw RM54.42 million or 51.86% of its total revenue generated by the segment.
That financial year, it recorded a RM41.85 million net profit on a RM104.93 million revenue. It expects FY16 to chart comparable results, with contributions from ongoing construction works and new property development launches.
“There will be stable revenue and profit derived from [the] water supply and services sector. Rental receivables of Kepong Brem Mall are also expected to continue [to] contribute positively to the results of the group,” he added.
In the meantime, Brem is tendering for some RM800 million worth of projects, including water treatment plant upgrading works in Terengganu, which it jointly tendered for with a private company.
“Based on our track record, we hope to clinch 50% of the total jobs we are bidding for,” Low said.
As for its property segment, Low said Brem will continue launching two projects a year.
“We have launched Prima Harmoni Phase 2 in Segambut, which carries a gross development value (GDV) of RM520 million early this year,” Low said. The group intends to launch its landed residences project in Sungai Petani — worth RM22 million in GDV — soon.
Other projects in the pipeline include the final phase of Pelangi Height in Klang with about 400 condominium units and RM160 million in GDV; a high-rise residential development in Setia Wangsa with an estimated RM1.8 billion GDV; and a proposed mixed development named PJ Brem City in Jalan 222, Petaling Jaya.
“The group still has 1,100 acres (445.15ha) of land bank in the Klang Valley, Kedah (Sungai Petani) and Melaka, which will be developed in phases, according to market conditions,” he added.
On its 22-year concession agreement obtained in 1997 for the upgrading of water supply system in Port Moresby, Papua New Guinea, Low said the group is negotiating for an extension with the water authorities there.
It has been generating stable revenue, profit and excellent cash flow for the group, he said. The group taps the water business in PNG via its subsidiary, PNG Water Ltd. Brem was awarded the contract on a build, operate and transfer basis, which will be expiring in 2019.
This article first appeared in The Edge Property pullout, on Sept 29, 2015.
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