BY
SYAHIRAH SYED JAAFAR
KUALA LUMPUR: Construction company
Bina Puri Holdings Bhd is hoping to sustain last year’s financial performance
at the very least, given that the property market remains tepid, while drastic
cost cuts by the new Pakatan Harapan government have derailed several key
projects.
“The outcome of the [14th] general
election (GE14) has certainly affected the sectors we are involved in,” Bina
Puri group executive director Datuk Matthew Tee Kai Woon told The Edge Financial
Daily after the group’s annual general meeting recently.
Tee was speaking in particular about
the group’s construction sector, which contributed a whopping 80% of its financial
year 2017 (FY17) revenue.
Even so, the division performed
poorly in FY17 as it registered a pre-tax loss of RM17.5 million, compared to a
profit before tax of RM6.4 million for FY16, owing to a provision for impairment
losses of RM25 million for trade receivables.
Because of the soft market, Tee said
the construction division secured only RM155 million worth of projects last
year — among the lowest in recent years.
For the full FY17, the company
posted a net profit of RM3.15 million on a revenue of RM1.08 billion, against
FY16’s profit of RM1.07 million on a RM1.05 billion revenue.
For the first quarter ended March
31, 2018, group net profit increased 32% to RM829,000 from RM626,000 last year.
However, revenue plunged 40% to RM166.57 million from RM279.03 million owing to
lower construction orders.
At present, the group has ongoing
projects valued at RM2.3 billion that will sustain the construction division
for the next two to three years.
Among these projects are a package
for the Pan Borneo Highway in Sarawak as well as a steam cracker complex in
Petroliam Nasional Bhd’s Refinery and Petrochemical Integrated Development
Project.
“We are hoping that more projects
materialise in 2018.
As you know, everyone was expecting
that after the general election, the [result] would be a boon to the
construction sector as it is a major beneficiary. However, after GE14, these
projects have then been revised, delayed or cancelled. So contractors are also
feeling lost,” Tee said.
Even though the construction sector
remains the main revenue driver, he said, the company is trying to boost its
other divisions, such as property development, power supply as well as quarry
and ready-mix concrete.
“We have been working hard over the
past few years to move away from relying on the construction sector. We are
lucky we have other segments to sustain our operations. Some of our property
projects are doing quite well too.”
According to the group’s FY17 annual
report, the property division saw its revenue increase by 70% to RM152.9
million, compared with the RM90.1 million reported for the previous year, while
profit before tax increased by 31% from RM24.1 million in FY16 to RM31.5 million
in FY17.
It attributed the performance to
encouraging sales of its development properties, namely Opus in Kuala Lumpur,
Jesselton View and One Jesselton in Kota Kinabalu, Sabah, The Valley in Karak, Bentong,
Pahang, plus the recurring retail rental income from the Main Place Mall in USJ
21, Subang Jaya, Selangor.
As at March 2018, the group had unbilled
property sales of RM164 million.
The zero-rating of the goods and services
tax is also a plus point as the group’s Main Place Mall is expected to benefit.
“When consumers spend, the tenant
would record better sales and we would subsequently benefit,” Tee said, but
acknowledged that the property market remains soft.
“With a new government, hopefully
they will put in place some interventions to spur the property market further.”
As for the group’s power supply
segment, Tee remains positive about its growth, but said developments will also
depend on new policies. He cited a recent memorandum of understanding between the
group’s unit BP Energy Sdn Bhd and Sabah state investment arm Warisan Harta
Sabah Sdn Bhd to collaborate on the proposed development of two small hydropower
sites in Tuaran and Kota Belud, Sabah.
“The mandate given to Warisan Harta
was by the previous chief minister, so now we have to see whether under the new
leadership, they would want to maintain the mandate. So we will have to negotiate
with the new state government on the two projects,” he explained.
Bina Puri is trading at about 26 sen,
having tumbled 37% over the last twelve months. Its market capitalisation is
some RM75 million.
