KLANG (May 17): Construction and civil engineering outfit WCT Bhd is targeting to secure at least 20% out of its RM5 billion tender book for the remaining quarters of this year.
During 1Q, WCT managed to secure about RM630 million worth of construction projects locally. The projects are the construction of the new headquarters for the Ministry of International Trade and Industry (Miti) in Kuala Lumpur and a medical centre in Kota Kinabalu, Sabah.
"We hope we will be able to get another RM1 billion for this year. We have about RM630 million to date, and we hope to get another RM1 billion. Our past record indicates that the success rate is about 20%. But you never know, records may be broken," said its deputy managing director Goh Chin Liong.
Speaking after the company AGM and EGM on Wednesday, Goh said the group targets to diversify its earnings base to 45% from the construction business, 30% from property development and the rest from property investment, by 2016.
Thus, the group is in the midst of increasing the share of its property investment division through its first four-star Premiere Hotel in WCT's first township development, Bandar Bukit Tinggi, here. The hotel has been in operation since 1½ years ago.
"Currently, this Premiere Hotel contributes between RM2.5 million to RM3 million per annum to WCT's net profit," said corporate affairs executive director Kenny Wong.
WCT is also completing Paradigm Mall in Kelana Jaya, which offers about 700,000 sq ft of net lettable area. In a news report recently, the group said the mall is already reaching 91% occupancy at an average base rental of RM6 psf.
As a part of the integrated Paradigm development project, WCT will build and manage another Premiere Hotel there, according to Wong. The hotel is expected to contribute RM2.5 million to RM3 million to the group's bottom line.
WCT will also bank on the klia2 integrated complex to increase the earnings contribution from its property investment business, as it has a build-operate-transfer (BOT) concession with 70% equity holding in the retail complex.
"The reason for us to increase the contribution from property investment business is that we would like to get more stable and recurring income to balance out the more cyclical incomes from the construction business," said WCT chairman Datuk Capt Ahmad Sufian Abdul Rashid.
WCT's order book now stands at RM3.3 billion, of which 60% comes from the domestic market and the rest from the international market, especially the Gulf Cooperative Council (GCC) countries such as Bahrain and United Arab Emirates.
On its property development division, WCT will develop another township called Bandar Parklands near its flagship Bandar Bukit Tinggi. The township will have a gross developement value (GDV) of RM400 million and consist of landed property units.
"In the past six months, we acquired about 500 acres (200ha) of land. We still have about another 1,000 acres of undeveloped landbank," said Wong.
The 500 acres, mainly located in the Klang Valley, have a potential GDV of RM5.2 billion. However, the land acquisition, which costs RM450 million, is still pending various approvals especially from the group's shareholders, said Goh.
"Purchasing an asset like that takes a lot of time due to the approval process. So it is still on going and I can't tell you when it will be finalised. More importantly, that acquisition is subject to shareholders' approval," he said.
Apart from the Klang Valley, WCT has a property development project in Iskandar Malaysia, specifically in Medini. The group is planning high rise residential units called 1Medini, with a potential GDV of RM700 million, there.
As a construction and engineering outfit, WCT has been a force to reckon with in the Middle East, with its portfolio comprising Formula 1 circuits as well as government administration buildings and highways.
However, according to Goh, the group is also interested in venturing into markets closer to home such as Myanmar and Indonesia, to take part in the development of infrastructure projects in these countries.
"But these are just exploratory. Myanmar is just starting to open up its market to foreign investors and companies. So we will have to be careful in committing our resources to an untested market," said Goh.
On the outlook of the construction industry in Malaysia, Sufian said it will be good and challenging at the same time because despite the many infrastructure projects being dished out, competition is very stiff among local players.
"I would say the Malaysian market is actually very small, and that is why many years ago we decided to venture overseas, so that we try and strike a balance between the domestic and international markets," he said.