WITH major engineering and construction contracts in hand, as well as involvement in projects ranging from water, utilities and infrastructure to oil and gas, there is little more that leading local engineering contractor Ranhill Bhd can ask for.
But is it contented? Apparently not. The grouphas gone on a buying spree of late to boost and expand its earnings base, with the acquisition of EPE Power Corp Bhd and a 70% stake in its main-board listed sister company Ranhill Utilities Bhd.
Expected to be finalised by year-end, the acquisition of EPE would mark Ranhill's entry into the power generation business. EPE's subsidiary, Powertron Resources Sdn Bhd, owns and operates a 120MW open-cycle gas-fired power plant in Sabah.
Last Wednesday Ranhill announced that it had acquired a dormant company, Jurus Global Sdn Bhd, which would be renamed Ranhill Energy Sdn Bhd to undertake energy and energy-related works and services.
The acquisitions are in sync with the group's business diversification plan to move away from an over-dependence on local engineering and construction projects into more asset-based industries.
Ranhill president and chief executive Tan Sri Hamdan Mohamad said the time had come for Ranhill to move out and seek projects overseas in view of the diminishing number of large local projects, coupled with increased competition that had cut margins.
And the oil and gas sector had potential, he said.
The group has made its bids for oil and gas projects in Myanmar, north Africa, eastern Europe and the Middle East.
“We want to be known as a serious player in the oil and gas sector and this division is expected to contribute about half of our total revenue in three years,” he said. Such projects contributed about 20% to the group's turnover last year.
Its overseas expansion plans are going well. For instance, the group had recently received a letter of intent from the Turkish Energy and Natural Resources Ministry for a water project in Bodrum Peninsula. The initial capital expenditure for this project is estimated at RM600mil.
Ranhill would be partnering Jawala Corp Sdn Bhd in securing more contracts in the Middle East, it said.
On the local front, where competitors have been snapping on its heels in the engineering and construction business, the group was not about to rest on its laurels either, despite an order book of RM1.5bil that would keep it busy well into next year.
Ranhill has received letters of intent for the construction of the Women and Child Hospital, which is the first dedicated hospital of its kind in Malaysia, and the upgrading of Federal Route 5.
Should these be translated into signed contracts, the group's order book would further increase to almost RM2.6bil.
For the financial year ended June 30, Ranhill pre-tax profit was RM82mil, matching last year's, on turnover of RM770.6mil, 24% higher than the RM620.8mil previously achieved. Basic earnings per share increased to 47.01 sen from 46.60.
The company had recently changed its corporate logo to reflect its diversification and expansion plans as well as its worldwide capabilities.
Listed on main board of the KLSE in 2001, Ranhill provided only mechanical and electrical engineering design services as an engineering partnership formed by the Australian engineering concern, Rankine and Hill when it first began.
Its Malaysian operations were set up in 1981 and within 10 years, the full range of engineering capabilities was attained and ownership became fully Malaysian.