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Monday, September 9, 2013

YFG to build affordable homes (Star)

YFG Bhd is in serious discussions with several private landowners to venture into property development to build affordable homes for the middle-income segment.

Apart from this, the company, which has 20 years of experience in electrical and mechanical engineering services and a strong foothold in the construction industry, is also looking at some recurring income-generating businesses to create more sustainable revenue for the company.

Managing director Lim Chong Ling said as the company currently had no landbank, it would work with private landowners to develop their land.

“We look for landowners who want to work with us in sharing the profit of the developed land. We would be able to provide them with a win-win situation, taking into consideration the land cost and the construction cost, and at the end of the day, share the profit,” he told StarBiz.

“With certain landowners with whom we are negotiating now, the profit sharing could be as high as 50:50.”

Currently, Lim said YFG was talking to some landowners outside Iskandar to build affordable homes there.

“We want to help middle-income earners own a decent property. Affordable to me reflects a property that ranges between RM350 and RM400 per sq ft, depending on location of course,” he said, adding that YFG had yet to sign any agreement with any landowners although it was in serious discussion with some.

On recurring income, Lim explained that YFG was interested to further expand its expertise in the construction business.

“It could be in the form of build, operate and lease; build, operate and transfer as well as private-public partnerships.

“For example, in our RM110mil engineering, procurement and construction job to build a 13MW biomass renewable energy power plant in Bera, Pahang, we would also operate the plant for a period of 10 years.

“This kind of recurring income injects more stability and provides a less lumpy income stream for the company.

“Construction and electrical and mechanical engineering jobs can be quite cyclical, hinging on economic factors,” he pointed out.

Nevertheless, Lim is optimistic on the outlook of these two core businesses for the next five years.

Currently, YFG has an orderbook in excess of RM550mil, far exceeding its target of RM300mil for the financial year ended June 30, 2013 (FY13).

“We are still actively tendering for more construction and electrical and mechanical engineering jobs worth about RM704mil as of today.

“The local construction market is still very robust, with Kota Kinabalu, Kuala Lumpur and Johor being the hotspots. Additionally, I foresee that more power plant contracts are going to be tendered out too,” he said.

On current jobs, Lim said YFG was busy with the construction of a mall on the Kota Kinabalu Waterfront and Jesselton Residences Waterfront.

“For the electrical and mechanical engineering business, we are finishing our work in KLIA2 as well as some other jobs in Johor,” he said.

Financially, Lim is excited that YFG, formerly known as PJI Holdings Bhd, had managed to turn around and be in the black for three consecutive years.

“We had suffered losses somewhere in 2005 and some period after that due to some overseas ventures that did not turn out well.

“But now, in the current financial year, we are looking at rewarding our shareholders via dividends,” he said.

For FY13, YFG’s net profit soared to RM4.6mil from RM1.2mil in FY12.

This was achieved on the back of a higher revenue of RM135.8mil against RM82.7mil a year ago.

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