Advancecon banks on govt-led infrastructure projects

by MARK RAO

ADVANCECON Holdings Bhd has secured a total orderbook of RM572.5 million, which will keep the group busy for the next two years.

The company — which is enroute to be listed on Bursa Malaysia on July 10 this year — was recently awarded infrastructure works for the West Coast Expressway, valued at RM239.8 million, and the Pan Borneo Highway (RM105.2 million).

The earthworks and civil engineering service provider has contracts worth RM227.5 million.

COO Yeo An Thai said the group will continue to bid for projects after putting bids worth RM496.4 million in various projects up to May 19 this year.

“Normally, we will look to enter these projects as the main contractor,” Yeo said after Advancecon’s prospectus launch in Kuala Lumpur yesterday.

However, he said Advancecon will also work as a subcontractor for large scale projects.

The company in a Bursa Malaysia filing yesterday announced a profit of RM6.8 million for the first-quarter of 2017, backed by a revenue of RM59.1 million.

For the financial year ended Dec 31, 2016 (FY16), the company recorded a turnover of RM234.67 million, 11.2% yearon-year (YoY) lower than FY15. Net profit for last year dropped 11.7% YoY to RM26.45 million.

Yeo said the lower turnover was due to the completion of two major projects last year, although the group is optimistic of achieving stronger growth going forward.

“The most important thing was that we maintained the same double-digit net profit margin, which averaged between 10% and 12% over the last three fiscal years,” he said.

Advancecon seeks to secure projects throughout Malaysia and has increased its presence in the Klang Valley, Negri Sembilan, Johor, Kedah, Penang and Sarawak.

Its chairman Datuk Yeoh Chong Keat said the earthworks and civil engineering market is expected to post strong growth in the next four years, as more projects are rolled out by the government.

“The growth for earthworks and civil engineering market shows no sign of slowing down, with revenue expected to increase from RM17.9 billion this year to RM32.8 billion in 2021.

“The industry is healthy and we intend to aggressively pursue new opportunities,” he said.

Yeoh said several mega projects — including the Central Spine Road and East Coast Rail Link — will anchor the industry’s growth and Advancecon is well-positioned to contest for more jobs. The construction company had participated in the developments of townships like Bandar Setia Alam, Setia EcoHill, Setia Eco Gardens, Eco Majestic and Tropicana Aman, besides infrastructure works for the Lebuhraya Kajang Seremban Highway-linked Trumpet Interchange and Ecohill Link. Advancecon is expected to raise RM56.7 million from its initial public offering (IPO) from the 90 million new shares at an issue price of 63 sen per share, or 22.4%, of its enlarged share capital.

A total of 33 million existing shares will be allocated for private placement to identified Bumiputera investors.

The company plans to use about RM29.7 million from the IPO proceeds for capital expenditure, including to purchase new equipment and the construction of a new workshop.

The balance RM12.5 million, RM10.7 million and RM3.8 million will be allocated for repayment of bank borrowings, working capital and listing expenses respectively.

Advancecon is expected to have a market value of RM253.31 million upon its listing.