Seacera allocates RM1b construction tenderbook

It will mainly focus on the construction division, while infrastructure bids will go towards civil works, according to group MD


Seacera Group Bhd will tender for RM1 billion worth of construction and infrastructure projects, as the company looks to replenish its dwindling orderbook.

For its first-quarter ended March 31 this year (1Q17), the company involved in the tiles, property and construction businesses saw its revenue decline more than half to RM12.92 million compared to the RM25.94 million for 1Q16, largely due to the majority of construction projects at the tail-end of development.

The soon-to-be-completed projects — secured via its 80%-owned subsidiary SPAZ Sdn Bhd — are the RM162 million hotel and apartment development for Koperasi Permodalan Felda Malaysia Bhd and the RM14.9 million police headquarters for Turn- pike Synergy Sdn Bhd, an indirect subsidiary under Permodalan Nasional Bhd. Seacera group MD Zulkarnin Ariffin said the company’s tenderbook will mainly focus on the construction division, while infrastructure bids will go towards civil works.

He added that the recent RM250 million 1Malaysia People’s Housing project in Negri Sembilan awarded by Wearegold Sdn Bhd is timely, as the group looks to replenish its orderbook.

“We are pushing to start works by October this year and subsequently could recognise contributions from the project by 4Q17,” he told reporters after the company’s EGM yesterday.

“We do not expect our current financial year (FY17) to be impacted much, but foresee contributions to start coming in by FY18.”

According to Zulkarnin, it is in line with Seacera’s strategy to reduce dependency on its maiden tile manufacturing and distribution business, and establishing the property and construction divisions as its core fiscal drivers going forward.

The company secured shareholders’ approval for the RM165.1 million takeover of the entire stake in Duta Nilai Holdings Sdn Bhd (DNHSB) to gain access to 501.5 acres (202.9ha) of freehold land in Hulu Semenyih, Selangor.

The proposed takeover, if successful, would represent an exercise that took over 13 years to complete — after Seacera initially attempted to form a joint venture with DNHSB’s parent company Duta Skyline Sdn Bhd back in 2005.

“We are banking on the 500 acres as the future growth for the group and company,” Zulkarnin explained.

“Once we manage to tie up with big players for the property development, we can secure stable income in the future.”

The site is intended for a township — catering mostly to the medium and high-end property segments — with a 10- to 15-year development period and estimated gross development value of up to RM10 billion.

Zulkarnin also said the land is too big for a company of its size to develop independently and is presently negotiating with leading property players to jointly build up the site, with an announcement hoping to be made within the next six months.

He added that the timing of project launches within the development — tentatively expected after two years — is appropriate, given the present downturn in the property market.

“The property development market is going through a rough patch and it is good time for planning,” he added.

“Once the market is up and running again, we can look at launching projects.”

The land sits within approximately 8km of the north and northeast Semenyih and Kajang town centres respectively, and approximately 25km to the southeast of the Kuala Lumpur (KL) City Centre.

Zulkarnin said the 500-acre site allows the group access to the vibrant property market of the southern KL region, while tapping into the Putrajaya and KL City Centre markets respectively.

For the tiles division, Seacera is in the middle of building a new plant in Kamunting, Perak, which will double capacity from 6,000 sq m to 12,000 sq m per day once completed in 3Q18.

The company further received shareholders’ approval for a proposed issuance of up to 90 million new ordinary shares at RM1 each to partially fund the acquisition of DNHSB, while approving a rights issue of 73.82 million shares and bonus issue of up to 177.45 million new warrants on the basis of two warrants for every five existing Seacera shares.

Shareholders also approved the proposed RM16.9 million acquisition of land located in Melaka from QM Sports Sdn Bhd.