Firmer and faster Road Builder


ROAD Builder (M) Holdings Bhd will be on a strong footing to become a leading infrastructure group in the region after the completion of its corporate streamlining exercise next year, its executive vice-chairman Tan Sri Chua Hock Chin said. 

The move to unlock value from the group's property assets, Seremban 2 and Shah Alam 2, held by its 70%-owned RB Land Sdn Bhd to associate Econstates Bhd is expected to be completed in the April-June quarter. 

Tan Sri Chua Hock Chin

Chua said Econstates would emerge as a 81%-owned listed property arm of Road Builder after the exercise. Road Builder will seek a waiver from the Securities Commission from having to make a mandatory general offer for the remaining shares in Econstates.  

An EGM to seek shareholders' approval will be held in the next few months.  

“The exercise is not something out of the blue. It is the last piece of our corporate streamlining process which started two to three years ago,'' Chua told StarBiz in an interview. 

“The business model of Road Builder will become very neat and easy for our investors to understand, in line with the call by the government to keep businesses transparent,” said Chua, one of the founders of Road Builder, and who still controls the group today. 

“With the exercise, we have created a financially independent listed property subsidiary which is able to raise funding independently and to expand more aggressively. Econstates will stand by itself as a listed property company and we expect it to perform much better as a major property player after the streamlining exercise. With Econstates focusing on property, Road Builder can focus on creating more value in the other divisions for its shareholders.”  

Chua said Road Builder, which started as a construction company in 1985 before venturing into property development in 1996, toll road (1997) and port operations (1998), had successfully groomed each of the divisions into mature concerns. 

On whether the toll road and port divisions may be spun off for listing in future, Chua said: “If there is an opportunity to do so and the timing is right, we may look at it seriously without losing sight of our vision.” 

Going by the impressive growth of about six times in its market capitalisation to RM1.9bil over the last decade, the KLSE main board construction group certainly has lived up to its vision “to be an innovative organisation committed to the pursuit of excellence and contributing significantly to nation building through infrastructure development.” 

Chua said strategically Road Builder would continue to focus on building up its recurring income divisions of toll roads and ports to shield its earnings from the cyclical nature of the construction sector.  

“The group's dependence on the construction division will fall significantly over the next few years, as a more diversified and balanced earnings base emerges where each of the core divisions contribute significantly, without an over-dependence on any single division,” he said. 

In the next two to three years, contribution from toll roads and ports to group pre-tax profit will increase to between 40% and 50% from about 15% in 2002, property development to contribute 15% to 20% (15% last year), and construction between 30% and 40% (from 60% ).  

Contribution from the toll road division, which currently operates the toll concession of the Sungai Besi Highway, is set to improve with the completion of the New Pantai Expressway, expected to be completed in the first quarter next year. 

(The new highway runs from Subang Jaya through Taman Maju Jaya, Pantai Dalam and ends at Jalan Bangsar and Jalan Kuchai Lama. It will provide a faster alternative route to the Federal Highway for motorists travelling between Petaling Jaya and Kuala Lumpur.) 

“We are also exploring other toll road opportunities on a build, operate and transfer basis in various parts of the country,” Chua said.  

Likewise, Road Builder's port division, which operates the Kuantan Port and the Kemaman Port's west wharf, is also looking to expand its operations.  

It is expected to emerge as a major shareholder of Kemaman Port's east wharf and liquid chemical berth upon completion of the privatisation exercise of Kemaman Port, which is expected soon.  

Chua said Road Builder had invested some RM300mil since the privatisation of Kuantan Port five years ago and the port's annual throughput of 9 million tonnes had the potential to achieve 20 million tonnes to become the region's maritime hub. 

“Following the sustained growth in cargo throughput since privatisation, the group has invested heavily in creating a larger inner harbour basin, and is constructing both container and liquid chemical berths to meet future demand,” he said.  

On the group's business focus, Chua said: “Construction will continue to be the backbone of Road Builder which will provide the necessary support for its other core divisions.  

“Road Builder's order book stands at RM1.5bil, mainly made up of infrastructure and road projects in the country. We have also tendered for infrastructure and road projects worth between RM2bil and RM3bil.”  

On the regional front, he said Road Builder had about RM600mil worth of jobs in various parts of India, mainly in highway construction projects.  

It is among the earliest Malaysian contractors to have secured construction jobs in India, and between 1996 and 2000, the group completed three jobs for the construction of 210km of highways for about RM500mil.  

Last year, it secured new highway projects in Uttar Pradesh and another two in Kerala. 

Chua said that besides India Road Builder was continuing to explore construction opportunities in other countries. 

In Malaysia, the group had completed three major projects last year. They are the commuter rail station at the KL International Airport, sub-structure of Perbadanan Putrajaya Complex and the Seri Saujana Bridge in Putrajaya. 

It also made successful bids for the Ipoh-Rawang double-tracking railway works, Proton plant infrastructure works, the upgrade of the Gemas-Air Hitam road, the Sungai Muar water pipeline project, the Jus Dam in Malacca and the superstructure of Perbadanan Putrajaya Complex.  

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