Fajarbaru eyeing Klang Valley land for property venture

KUALA LUMPUR: Construction outfit, Fajarbaru Builder Group Bhd, is looking to acquire landbank in the Klang Valley towards venturing into the property development business, besides bidding for larger and more sophisticated construction projects.

Its managing director and CEO Datuk Low Keng Kok said these were part of a two-pronged strategy the company had in place after the completion of its capital-raising exercise through a private placement at the end of last year.

“We are now in talks with several parties for land within the Klang Valley for housing project development, as the area is still the magnet for natural migration that will create demand for housing,” he told The Edge Financial Daily.

At the moment, the group has an 80ha land in Port Dickson, Negri Sembilan. While work has yet to commence, Fajarbaru plans to use the land for medium- to high-end property development.

Fajarbaru in October last year announced the completion of its private placement exercise with the listing of 14.1 million new shares that were issued at RM1.13 each.

With the completion of the private placement exercise, Fajarbaru has a total of 164.34 million shares outstanding, while free float stands at 52.72% or 86.64 million shares, according to Bloomberg data.

In terms of construction jobs, Low said the group had submitted bids for the RM2 billion new low-cost carrier terminal (LCCT) near the Kuala Lumpur International Airport. Fajarbaru’s order book balance stood at RM505 million as at end-March 2009.

The group has vast airport-related experience, having previously been awarded a RM124 million contract for the expansion of the current LCCT in Sepang in 2008. The contract was a follow-up job from its previous RM108 million contact for the LCCT in May 2005, which was the group’s first major project.

Since then, Fajarbaru has secured at least two key construction contracts worth a total of RM440 million in the financial year ended June 30, 2008 (FY08), including a RM316 million subcontract for the Seremban-Gemas electrified double-tracking project from India’s Ircon International, the main contractor for the southern stretch.

For FY09, Fajarbaru recorded a net profit of RM18.12 million, up 32.7% from 13.65 million in the previous year, while revenue rose 110.7% to RM184.6 million from RM87.61 million.

The stock rose four sen or 3.64% to RM1.14, with 1.63 million shares done last Friday. The shares have gained by 9.62% so far this year and are trading at 7.51 times price-to-earnings ratio compared with the industry average of 13.33 times.

This article appeared in The Edge Financial Daily, Jan 18, 2010.

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