The group is committed to tender for more govt hospital projects following the effects of Covid-19 pandemic

by NUR HANANI AZMAN / pic by TMR FILE

GAGASAN Nadi Cergas Bhd is looking to leverage its track record in building affordable homes and public hospitals to bid for similar construction contracts this year.

Its MD Wan Azman Wan Kamal (picture) said the group is committed to tender for more government hospital projects after the Covid-19 pandemic revealed a need for more public hospitals in the healthcare system to fight infectious disease outbreaks.

“The Covid-19 pandemic has revealed a strain in our healthcare sector, which highlights the disproportion of public hospitals in Malaysia,” he told The Malaysian Reserve recently.

Like many construction players in the country, Gagasan Nadi’s income last year was affected by the extended implementation of the Movement Control Order (MCO).

Wan Azman, however, believes the worst is over for the group’s construction segment as it moves into the financial year ending Dec 31, 2021 (FY21), with construction sites allowed to operate and the government’s commitment to keep the economy running via targeted restrictions instead of blanket restrictive orders.

“Our recent RM97.4 million construction win from the Public Works Department to design and build a full-fledged MRSM (Mara Junior Science College) campus in Dungun, Terengganu, also marked signs of more things to come for the construction sector in FY21.

“Backed by an increasing contribution from our property development projects and consistent recurring income streams from our utilities, facility management and concession segments, we are optimistic that FY21 will be on a better footing than the year before,” he said.

The turnkey contract to design and build the MRSM campus will span from March 29, 2021, until its completion date of Oct 15, 2023. The group secured the letter of award through its wholly owned unit Nadi Cergas Sdn Bhd.

Gagasan Nadi currently has an outstanding orderbook of RM1.3 billion, which will provide earnings visibility to the group up until FY26.

The orderbook includes ongoing construction of the Cardiology Centre in Serdang Hospital, Selangor, the MRSM Dungun campus contract, as well as affordable home projects in Shah Alam and Serendah in Selangor under the Rumah Idaman and Rumah Selangorku initiatives.

“Our existing integrated business model of being a contractor for both the private and public sectors, supported by property development, is working to our advantage.

“We do not see a need to restructure our business model, perhaps only fine-tuning it to enhance our sustainability and resilience by identifying growth opportunities,” Wan Azman said.

Gagasan Nadi registered encouraging performance in its property segment in FY20, attributed to the strong demand received from its affordable township development in Selindung, Ulu Yam, Selangor.

Apart from achieving more than 80% take-up rate for the Phase 1 Selindung Ulu Yam development, the recently launched Phase 2 has also been fully taken up, which Wan Azman said is a testament of its customers’ faith in the quality and price competitiveness of the group’s projects.

Antara Residence in Putrajaya, its first residential high-rise development, is also making good construction progress and is on track to be completed in 2022.

Wan Azman said the construction segment contributed the lion’s share of RM163.1 million or 78.8% of total revenue in FY20.

“About RM24 million or 11.6% of total revenue was derived from property development, while the balance of RM19.8 million or 9.6% of revenue was from our recurring income segments.

“Moving forward, we foresee our property segment to emerge as a more significant revenue contributor to the group as we launch our subsequent pipeline affordable home projects namely Rumah Idaman projects in Bukit Jelutong and Elmina, Shah Alam,” he said.

Gagasan Nadi’s annual net profit fell 50.5% year-on-year (YoY) to RM12.51 million in FY20 from RM25.28 million. Its revenue during the same period also declined 28.6% YoY to RM206.9 million from RM289.63 million.

For the fourth quarter of 2020, the group’s net profit increased 32.5% YoY to RM5.78 million from RM4.36 million supported by encouraging performance in its property development and recurring income segments.

Its revenue in the same quarter decreased 25% to RM55.67 million from RM74.26 million.

The performance of the group’s facility management for the concession projects and the utility services segment is expected to remain stable and sustainable.