Nestcon to expand IBSs, RE works post ACE debut

by ANIS HAZIM / pic by TMR FILE

NESTCON Bhd aims to expand its product and service portfolio into industrialised building systems (IBSs) and renewable energy (RE) works with the RM45.1 million raised from its ACE Market debut.

The building and infrastructure construction services provider plans to use RM6 million of the proceeds to establish an IBS facility for its building division.

“We believe the IBS facility we are establishing will elevate our building segment capability meaningfully and put us on the front foot among our peers,” Nestcon group MD Datuk Dr Lim Jee Gin stated in a release yesterday.

He said the mass production technique had been adopted by many big construction companies in Malaysia due to its long list of benefits such as quality control, costs reduction and acceleration of timelines.

Lim further said the IBS technique would enable Nestcon to reduce reliance on foreign workers as the industry faces potential foreign labour shortages.

He said new machinery and equipment would enhance Nestcon’s civil engineering and infrastructure segment as the company eyes tenders for larger projects.

Year-to-date, Nestcon’s IPO was the second-largest in the ACE Market in terms of the amount raised.

The group’s shares opened at a 7.1% premium or 30 sen, up by two sen from its issue price of 28 sen. The stock closed its maiden trading day at 32 sen after testing a high of 37 sen and low of 30 sen in intraday trade.

Of the RM45.1 million proceeds, RM6 million (13.3%) will be used to establish the IBS facility, while RM6.6 million (14.7%) will be used to purchase machinery and equipment.

RM16.5 million (36.6%) is ear-marked for repayment of bank borrowings with RM11 million (24.3%) set aside for working capital. RM1 million (2.2%) will be used to upgrade software and systems.

Lim said the company is optimistic about the construction industry’s outlook backed by government-led initiatives and spending on infrastructure and housing developments.

He noted that the acceleration of the vaccination administered daily would play a vital part in the economic recovery.

Despite the Covid-19 pandemic, Nestcon had not encountered any contract termination. It has 51 tenders valued at around RM2.8 billion.

Nestcon raked in RM95.6 million in revenue for its first quarter ended March 31, 2021, and made a net profit of RM3.7 million, which translated into a net profit margin of about 3.9%.

At 32 sen a share, Nestcon valuation stood at RM155 million.