Gabungan AQRS focuses on PPP projects

PETALING JAYA (July 9): Gabungan AQRS Bhd, a construction outfit that is en route to a Main Market listing end-July, sets its focus on government-initiated public-private sector partnership (PPP) projects under the 10th Malaysia Plan.

Its CEO Alvin Ng said Gabungan AQRS would take a more proactive approach. The company would not only look at the available PPP projects but also try and initiate its own PPP projects.

“We’ll be looking at two fronts. One is the projects the government has already planned. We will also be looking at the projects the government hasn’t planned where we will try and identify their needs and suitable PPPs for them”, he told The Edge Financial Daily.

Gabungan AQRS wants to capitalise on the industralised building system (IBS), which Ng believes has given the company a competitive edge in the construction sector. The IBS allows components to be manufactured off-site and then transported and assembled at the construction site.

Ng believes the company has a competitive edge in the construction sector under the industralised building system.

Gabungan AQRS has been profitable in the last three financial years. However, the company posted net profit of RM48.2 million for the financial year ended Dec 31, compared with RM48.9 million in the previous year. Revenue came in at RM372.4 million, up 24.3% from RM299.5 million in 2010.

Gabungan AQRS’ IPO is priced at RM1.18 per share, valuing the construction and property development outfit at price-earnings ratio of 8.4 times based on historical earnings per share (post listing) of 14 sen for FY2011. Ng said the company is currently looking for an IBS plant to acquire in east Malaysia, with a RM5 million budget.

“We are looking into expanding in east Malaysia, specifically acquiring an IBS plant”, said Ng, who is also a substantial shareholder with a 13.38% equity stake. “As far as east Malaysia is concerned, IBS is still relatively new.

If we were to enter the market there, we would have a head start compared to our competitors,” he added. According to the IPO prospectus, the construction company currently has a tender book of RM1.64 billion and order book of RM855 million under its belt.

Meanwhile, its property development arm has landbank of about 13ha with a gross development value (GDV) of RM1.44 billion. Gabungan AQRS is confident that it is in a strong position to expand especially with its sizeable tender and order books. “We are optimistic because of our aggressiveness in the tendering and book building exercises”, Ng said.

“We believe we have a strong chance of growing our order book very well.” Ng noted that the listing of Gabungan AQRS would complement the company’s expansion plans while maintaining its strong position to be able to “pick and choose” the projects it takes up.

“Many [people] have asked us, why do we need to list? Looking at our cash flow position we’re still very healthy but we want to provide a quantum leap to our expansion while still maintaining a healthy gearing,” he said. “We always want to position ourselves to be able to choose the projects we take up.

Where project procurement is concerned we’re very selective, just to make sure we have reasonable margins that have assured collections.” The company intends to raise RM73.16 million from its IPO and will be issuing 62 million new ordinary shares and selling 30 million of its existing ordinary shares at RM1.18 each.

The company stated in the prospectus that RM30.46 million from the proceeds will be allocated for its working capital, RM25 million will be used to acquire new land, RM12 million for its new corporate headquarters while the remaining RM5.7 million will be allocated for listing expenses. “We want to expand the company and through listing it will actually allow us to raise some funds and tap into the capital markets,” said Ng.

The company’s single largest shareholder is Ng Chun Seong holding a 24.55% stake, while Shahrum Niza Yahya and Lim Ann Liang own 17.84% and 16.36% respectively.

Executive director Meriah Nasibi also holds 13.38% stake Gabungan AQRS. In terms of expanding its operations abroad, Ng said the company is in no rush but in the long run it does intend to venture overseas once the right opportunity arises.

“It’s always about the right opportunities. We do not need to rush into anything because at this moment in time we have a lot on our plate,” he said.

According to Ng, the company has been exploring the idea of venturing into Indonesia due to its close proximity but will still maintain a very prudent approach in its overseas expansion plans.

This article appeared in The Edge Financial Daily July 9, 2012.