Diversified construction company confident of securing a big job that will last years
After a weakened financial year 2016 ended Dec 31, things could start looking up again for PROTASCO BHD next year.
The diversified construction company’s managing director, Datuk Seri Ir Chong Ket Pen, tells StarBizWeek that he is quite confident of securing a relatively big tender that would help grow its earnings again.
“This will be in the building (construction) space and it will be big. If we do get it, it should last us for many years. But this is still a hope for now as we have yet to secure it,” Chong says.
He says that the company expects to record a relatively flat year-on-year performance in 2017 due to the lag effect from the slowdown that was experienced last year.
“What happened in 2016 carries through to this year that’s why it affects our results and it can be quite flat. Growth in 2018 should be better than this year. This will restart our upward trend and we hope to be able to get double-digit growth. This will be driven by the property side with our other projects starting to kick off,” Chong says.
“Construction will also start to recover towards the end of the year while our maintenance side is strong. The company’s three focus areas are on the construction, maintenance and property side,” he adds.
The company’s performance in 2016 took a hit with bottomline falling by some 34% from the previous year to RM44.37mil due to the non-renewal of road maintenance contracts, reduced work orders on maintenance works and the reduced completion of property development projects.
Topline also reduced by some 17% to RM1.09bil from RM1.31bil in the previous year.
Both the maintenance and property development business segments weighed on its performance last year.
Moving forward, Chong says that the company expects to top up its order books by at least some RM500mil-RM600mil per year in the construction space.
In the construction space, the company provides services in designing, constructing, upgrading and the rehabilitation of roads, bridges and buildings.
Among its notable projects include the Phase 1 and 2 of the Perumahan Penjawat Awam 1Malaysia (PPA1M) in Putrajaya and it has also built the bridge linking Old Klang Road with the New Pantai Expressway across the Klang River.
The company says that phase 2 of PPA1M project is expected to contribute its revenue in 2017.
“We now have an outstanding orderbook of about RM760mil that will last us for 1½ years. If I top up at least RM500mil every year then we can continue to replenish this because my burning rate is RM500mil a year. It is not an issue to top up RM500-RM600mil every year and we are fairly comfortable of doing this,” he says.
In the year-to-date until June 30 for the first six months, Chong says Protasco has already replenished about RM300mil into its orderbook. Chong says the construction space could help boost its performance due its experience before.
“The Prime Minister has announced before that they need to build some 200,000 affordable homes for the civil servants. We are very strong in building for the government in the affordable side and we already have a track record,” he says.
“We have built and completed the phase 1 of PPA1M six months ahead of schedule and it has been handed over. We are building phase 2 now and we are going to start phase 3 while phase 4 is coming quite soon so we feel that we can continue to win these sort of contracts,” Chong adds.
He says 2018 could also see improvements premised on the recovery of the property sector.
“This is from the launch of smaller property projects including those outside the Klang Valley,” Chong says.
In its 2015 annual report the company stated that it believes that the property market will continue to remain soft this year based on prevailing market sentiment and tighter lending conditions from financial institutions.
It has decided to hold back the launch of its phase 2B Rimbawan Residences @ De Centrum that comprises mainly high-end properties and would be focusing on affordable units at De Centrum City, Kajang.
New launches are also expected in Kota Baru, Kelantan and Pasir Gudang, Johor.
While it is still too early to say if 2018 would be a year when the property market finally recovers, Protasco’s construction projects contracted for by the Government could help it sail through the tough times in the property sector.