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Friday, June 26, 2015

Salcon seeks to bag 30% to 40% of RM2b tender book (Edge)

Water infrastructure specialist Salcon Bhd (fundamental: 1.65; valuation: 1.2) is confident of securing between 30% and 40% of its RM2 billion tender book by end-2015, despite the gloomy economic outlook.

Executive director Datuk Eddy Leong Kok Wah (pic) said the company’s average success rate on its tender book was at around 20%, but it could hit the targeted figure this year.

“The tenders mainly consist of domestic projects [worth] up to RM2 billion, out of which RM1.25 billion is local and RM750 million is overseas. We have eight [ongoing] local projects and five in Sri Lanka.

“If we can secure one of the local contracts this year, we can easily secure 30% to 40% of our RM2 billion tender book. It still depends on the party … but we know that we are in the running. We are optimistic. We have our track record. And we are trying hard,” said Leong after the company’s annual general meeting yesterday.

He said the company is quite comfortable after receiving payment for eight out of its nine concessions in China. Currently, Salcon is sitting on a RM270 million cash pile as a result of disposing of its China portfolio.

“Currently, the final concession is under arbitration. The issue with our partner in Shantung is that [although] they want to buy [our] shares, they don’t want to pay the same amount that our Beijing client is willing to pay.

“We are confident the matter will be resolved ... by the third quarter of this year,” said Leong, adding that the company is now looking into areas in which to invest its China proceeds as some shareholders are not happy with the 3% bank interest rate the company is gaining as “sleeping money”.

Moving forward, Salcon hopes that its diversification into the property and telecommunication markets will also contribute to future revenue when compared with its more traditional water treatment and waste water business.

“We have secured a 15-year concession with Prasarana to lay fibre optics along monorail and LRT lines to provide broadband to the rail service. It’s known as Vox Bahn Technolog. We laid the cables in January and are now negotiating with all the major telcos.

“The telcos will then lease [the service] to end users or subscribers,” Leong said.

He added that the company has three parcels of land that are being developed but due to “turbulent times”, Salcon is taking more time with it.

“We have diversified a bit into property development. We got our first project in Selayang, Selangor, building 280 units of apartments, [which we] hope to deliver by end of next year. The pick-up rate is 70% and above, so it’s quite positive,” said Leong, adding that the project’s estimated gross development value is RM160 million, which is to be factored in next year.

Salcon’s land bank also includes a 12.5-acre (4.18ha) lot in Johor Baru and 5½ acres in Kampung Attap, Kuala Lumpur.

3 comments:

Nianjib said...

Not really favour of Salcon as the company's price is quite fluctuate and the management is not really of what I like.

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Abby said...

Good reead