Bright future for UEM


BY B.K. SIDHU

ONE of the biggest challenges ahead for the UEM group is to meet the expectations of shareholders and the investing public, as it was once a “must-have stock” of fund managers.  

But UEM group managing director and chief executive officer Datuk Abdul Wahid Omar said the “future of UEM group is bright.” 

“We are certainly happy with our progress thus far, but having said that, we believe there are a lot more things that can be done,” he said. 

The Penang bridge built by UEM

Only last week Wahid spent quite a bit of time drawing up the group's business plan for 2004, setting new targets and goals for his entire team, who had been with him from the onset of his journey to restructure the group. 

To him, the core components are in place and it is a matter of achieving the goals set as the group moves along.  

 

ENGINEERING & CONSTRUCTION 

Wahid said the group's engineering & construction unit, part of UEM World Bhd, had an impressive order book worth RM3bil to last it till 2006. The unit is also on an aggressive drive to secure more E&C projects both domestically and abroad. He expects the unit to achieve an annual turnover of RM1bil for this year.  

Its current projects include the building of bridges for the Ipoh-Rawang electrified double tracking rail project; the construction of 8 remaining out of the 10 new hospitals in Sabah and Sarawak; heavy repair works along the North-South Expressway; highway projects in India; and two construction projects in Qatar.  

 

HEALTHCARE  

Wahid said Pharmaniaga Bhd would seek ways to distribute more products to customers. At present, it is distributing to the government hospitals and wants to expand to non-governmental hospitals, teaching hospitals, and private clinics. 

The company would also look at making products based on patents that have expired or are about to expire. Some of the products would be exported. Pharmaniaga's quest is to grow its regional presence, and it is currently targeting the Vietnam and Myanmar markets. 

Pharmaniaga provides IT solutions for the healthcare sector, where all government hospitals and clinics' inventory systems are linked so that the government knows the optimum level of stocks at any one time.  

 

ENVIRONMENTAL SERVICES 

Kualiti Alam Sdn Bhd, which has a 15-year contract to manage waste in Peninsular Malaysia, would double the capacity of its incinerator by 40,000 metric tonnes by 2006.  

This means the company would be able to even import waste materials for treatment. 

Its other unit, Environment Idaman, would begin collecting municipal waste in the northern states soon. 

“But there are also opportunities in other environment services sector such as water-related projects that we are keen on. We are talking about new opportunities and new ideas.” 

 

UEM LAND 

The Prolink land bank in Johor Baru spans 16,200 acres and this will be developed in stages, for Wahid does not see any rush to fast track the development. 

“It is the long-term potential of the land we are looking at, and whatever plans we have would be realised. But the value of land now is incredibly low compared to just across the Straits. However, we believe over time, this disparity will narrow. 

“We foresee a lot of demand for the land coming from across the Straits for good quality kind of resort housing,” he said. 

Wahid added that South Johor was shaping into a logistics hub and UEM's Prolink land was smack in the area. For now, a mini Putrajaya on a 320-acre site is being developed for the state government. 

This development would spur growth in the surrounding areas and the demand for housing and infrastructure in the administrative capital. 

Asked on whether Universal Studios was still keen to set up a theme park in the area, he said plans were being reviewed due to the events in the last two years such as the severe acute respiratory syndrome outbreak. 

“We are in very close discussions with Universal Studios and we will revisit the plan in terms of size and cost. We are still keen to have an international theme park in the area but it may take some time to materialise,” Wahid said.  

But UEM has no plans to sell any more plots of land there, instead looking into its own development or “via a joint venture with reputable parties”. 

 

DIVESTMENT PLAN  

Only CIMA Bhd would not be divested as part of the earlier-announced divestment plan. Thus far UEM has sold a 9% stake in Commerce Asset-Holdings Bhd for RM888mil; a 38.56% stake in Crest Petroleum Bhd for RM105.2mil; 5% in First Islamic Investment Bank for RM37mil; Permaijana Ribu Sdn Bhd (undertaking the reclamation works at Tanjong Tokong) for RM90mil; 18.9% in Park May for RM5mil; and TimeCel for RM1.3bil. For this it raked RM2.4bil. 

When combined with the proceeds from listing Plus Expressways Bhd of RM2.3bil and RM4.2bil off its books with Putra LRT taken away by the government, the total divestment amounts RM8.9bil. 

On the sale of its 32.5% stake in Ho Hup, Wahid said: “We are in negotiations with an individual. We expect to get a reasonable price for the stake, and the sooner it is concluded, the better it is for us.” 

 

FABER GROUP BHD  

Plans to sell Faber have been shelved as well, but its assets, except MediServe Sdn Bhd and a hotel in Hanoi, will be divested as part of its plan to settle the company's debts. 

Wahid revealed that UEM was at the tail end of negotiations with banks over the RM1.2bil bond issue and a conclusion would mean Faber averting the PN4 category by year-end.  

“This new development will make its balance sheet better and strong, and it would turn into a profitable entity.”  

 

PARK MAY BHD 

UEM had sold 18.9% in Park May to Nadicorp Holdings Bhd. 

“We are working with the banks (together with Nadicorp) to negotiate on an acceptable settlement and hopefully will be able to present the proposal to shareholders soon. Eventually, we would be a minority shareholder in Park May,” he said.  

 

TIME ENGINEERING 

Wahid said Time Engineering is also being restructured so that its debt level is reduced. He said the company had recently succeeded in bringing new profitable business with the award of a RM500mil contract to manage notebooks to teachers. 

On Time dotCom, he said: “The central issue was not achieving the targets which were set by the previous Board in the prospectus. Our priority is to make sure Time dotCom returns to the black,” he said. 

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