Ekovest eyes more highway projects

KUALA LUMPUR: Ekovest Bhd, which is banking on assets to generate more recurring income, is keen on developing highways in the southern Kuala Lumpur area as part of its expansion plans, said managing director Lim Keng Cheng.

“We have submitted several highway building proposals to the government, two of which are tenders for the extension of highways in southern KL worth RM2 billion,” he said after the company EGM yesterday.

Lim said the company should receive news on the outcome of the proposals within six months.

“Our group is keen on building highways. Although [they are] difficult to construct, the traffic will be there,” he said, adding that Ekovest’s shareholders are positive on the future expansion.

Ekovest already has a highway concession in its portfolio, the Duke or Duta-Ulu Kelang Expressway, an 18km expressway traversing east to west along the northern corridor of Kuala Lumpur.

The concession company Konsortium Lebuhraya Utara-Timur (KL) Sdn Bhd (Kesturi) is wholly owned by Nuzen Corp Sdn Bhd, which in turn is a joint venture company between Ekovest’s 70% owned Wira Kristal Sdn Bhd and Malaysian Resources Corp Bhd.

At the EGM, shareholders gave the nod for the extension of the Duke, which consists of two major links. They are the Sri Damansara link, which will connect the Kuala Lumpur Middle Ring Road 2 to Duke, and the Tun Razak link, which will create a new link between Duke and the Kuala Lumpur Inner Ring Road to combat traffic congestion in Jalan Tun Razak.

To fund the construction costs of the extension, Kesturi will refinance its existing borrowings by issuing new senior sukuk and junior bonds to raise total net proceeds of RM2.3 billion.

Lim: Our group is keen on building highways. Although [they are] difficult to construct, the traffic will be there.

Ekovest’s total outstanding order book currently stands at RM2.24 billion. The sukuk would increase its gearing level substantially to 3.09 from 0.99 times as at June 30.

Lim said Ekovest’s property projects have been growing fast, with 70% of EkoCheras, its eco-friendly mixed development commercial hub in Jalan Cheras, sold since its launch in early September.

“In the pipeline, we are going for Setapak — where we have five parcels of land spanning more than 20 acres (8.09ha) with a total gross development value of RM6 billion,” he said.

Ekovest has a 34 acre landbank in Greater KL and a smaller piece of land in Iskandar Malaysia in Johor (25 acres).

“As we are focusing on our KL projects at the moment, we do not plan to develop the Iskandar land within these two years,” Lim said.

On the impact of the goods and services tax (GST) on Ekovest, Lim said toll revenue is exempt from GST while the impact will not be severe on construction costs as it can lock in the purchase and take advance delivery of building materials.

“As arranged in Phase 1 of the construction of the Duke highway, we have already purchased the steel bars before the price increase,” he said, adding that it will utilise part of the RM1.18 billion raised from the sukuk for this purpose.


This article first appeared in The Edge Financial Daily, on November 14, 2013.