S P Setia touch for Salcon

KUALA LUMPUR: Salcon Bhd’s tie-up with Eco-World Development Sdn Bhd, a company linked to S P Setia Bhd’s Tan Sri Liew Kee Sin, will pave the way for the water and waste water engineering company to go big into the Johor property sector.

Salcon executive director Datuk Leong Kok Wah said the company, in the immediate term, will develop a RM1.2 billion mixed commercial project in Johor together with Eco-World Development.

Leong said Salcon has appointed Eco-World Development as the main contractor for the Johor project.

Eco-World Development is an upcoming player in the property world and has Liew’s son as a director. Leong, who sat on the S P Setia board for 13 years, also sits on the board of Eco-World Development.

The development, known as JB Festival Mall and Serviced Apartments, is majority owned by Salcon.

"We are completing the land acquisition in Johor," Leong said, adding that construction is expected to commence in the first quarter (1Q) of 2014 with completion by 4Q of 2019.

Apart from the project in Johor Baru, Salcon has another project in Selayang with a smaller gross development value (GDV) of RM150 million.

The 3,988 sq m site in Selayang is being developed by Azitin Venture Sdn Bhd.

Salcon via its subsidiary Salcon Development Sdn Bhd owns a 50% stake plus one share in Azitin Venture.

The property is being developed into 280 medium-cost apartments with 40% sold so far.

Leong said contribution from the Selayang property project will be reflected next year while the Johor project will be stretched over the next five years.

He noted that property is expected to a significant contributor to the group’s profit from next year onwards.

Eco-World Development hogged the limelight recently when it bought four parcels of land worth  RM604.65 million in Johor and Kuala Lumpur from DRB-Hicom Bhd.

Leong denied that there were conflict of interest issues because of his position on the boards of Salcon and Eco-World Development.

"There is no conflict of interest. Both companies can work together," he said.

Salcon recently ventured into the property business to diversify its revenue.

"I think there are still a lot of opportunities and property has been a good hedge for investors," he told reporters after the company AGM yesterday.

Leong said the group is going into property development actively as such  contributions are deemed more consistent.  

He said Salcon is also open to joint ventures with property firms.

Leong said Salcon has not lost sight of its water engineering business.

Towards this end, Salcon has submitted bids for RM1.8 billion worth of water-based contracts so far this year.

Leong said though the pace of water contracts last year had been slow, Salcon is optimistic about securing more contracts this year, which will contribute to significant growth next year.

"For the first four months of this year our water and water-waste division has already won a total of RM216 million contracts so far and we are signing another contract which will give us a total of RM300 million."

Leong noted the group still had another six months before its financial year end of  Dec 31, 2013 (FY13). The group has an outstanding order book of RM350 million.

According to Leong, Salcon, which has tendered for the Langat 2 contract in Selangor, is also eyeing water jobs in Sabah and Johor.

"We are also tendering for contracts in Sabah and Johor. This year will be a very exciting year for our water and water waste division," he said.

This article first appeared in The Edge Financial Daily, on June 21, 2013.