FORTUNES are changing for mid-sized construction group TRC Synergy Bhd as contracts from the Ninth Malaysia Plan (9MP) start to trickle in.
Executive chairman Datuk Seri Sufri Mohd Zin agreed that 2006 was a reasonably favourable year for TRC.
The group clinched over half a billion ringgit worth of contracts last year. It has also received a letter of intent from the Government to design, construct, complete, test and commission a submarine base worth RM318mil in Kota Kinabalu.
“TRC is a direct beneficiary of the 9MP. The projects secured from the middle of last year are from the 9MP.
“My presumption that this is only the beginning is very comforting. Once the 9MP is fully implemented, the construction industry should be very busy,” Sufri told StarBiz.
This was a far cry from the past few years, when the construction industry was in the doldrums.
TRC reached its lowest point in 2005 when the group went into the red with a net loss of RM5.2mil.
Sufri pointed out that mid-sized construction players would generally be the first to benefit from the 9MP as smaller contracts were rolled out.
“The bigger contracts should be out soon. We will also benefit when this happens as we become a sub-contractor to the larger companies,” he said.
TRC’s order book currently stood at about RM800mil, of which RM600mil are still unbilled and is estimated to keep the group busy for the next three years.
With expectations of a more aggressive rollout of projects under the 9MP, Sufri is confident this year will be more lucrative for the group in terms of the number of contracts clinched.
“Our personnel is busy sharpening their pencils to ensure that the tenders we submit are competitive,” he said, adding that the group was bidding for about RM400mil worth of contracts with results expected to be out in two to three months.
TRC returned to the black with a net profit of RM7.7mil for the nine months ended Sept 30, 2006 compared with a net loss of RM2.4mil in the same period previously. Meanwhile, revenue jumped 47% to RM171.3mil from RM116.5mil.
Sufri expects profit for the fourth quarter ended Dec 31, 2006 to be boosted by two ongoing projects – the construction of the Bentong Prison Complex in Pahang and the Sibu Road in Sarawak.
“We will be recognising a full year turnover from our newly secured projects this year and in 2008.
“On top of that, we will still be securing new projects – we expect the next few years to be very good for the group in terms of profitability and cashflow,” Sufri said.
TRC is also in the midst of a rights issue, which is expected to raise RM60mil.
About RM40mil will be used to pare down borrowings. This will result in interest cost savings of RM2mil to RM3mil per year.
The balance of the proceeds will be used for working capital and business development.
On the group’s expansion plans, Sufri said there was a possibility for TRC to expand into the oil and gas (O&G) industry.
“Our business has always been construction-related but we think there are opportunities in the O&G industry. Our plan is to acquire a small O&G outfit.
“There are construction-related aspects in the O&G business and we are looking at ventures where we are not too unfamiliar, for example, constructing O&G depots and even platforms,” he said.
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