PETALING JAYA: After five years of losses, O&C Resources Bhd’s (OCR) turnaround plan appears to be on track, with both its earnings and orderbook replenishment being on the uptrend.
This year alone, OCR has garnered some seven contracts, which are a combination of construction and property development jobs from various government agencies.
“We have put the house in order and the turnaround is going as planned. Financial year 2018 (FY18) should see further improvements, and based on existing contracts,” managing director Billy Ong Kah Hoe said.
RHB Research expects OCR to record a net profit of RM3.6mil on the back of a revenue of RM18.1mil for its financial year ended July 31, 2017.
The big jump in earnings is expected to be seen in FY18, with RHB Research forecasting a net profit of RM18.1mil on the back of RM182mil in revenue.
“Right now, the improving results are due to progressive recognition of revenue from one project. Over the next six months, we will be starting on some three projects, two PR1MA-related contracts and our Pahang contract, which we just announced this (last) week,” said Ong.
Last Thursday, OCR announced that it has teamed up with the Pahang State Foundation to carry out a mixed development project in Penor, Pahang. The project will have an estimated gross development value (GDV) of RM166mil.
Ong said this contract had already secured 75% of sales and OCR was in the midst of getting the nescessary approvals to start work before year-end.
The Pahang project stems from the appointment of OCR’s 70%-owned subsidiary, Pangkal Teguh Sdn Bhd, in September last year as project management consultant (PMC) for the foundation’s affordable homes in Pahang.
The affordable housing development scheme will consist of about 25,000 residential units and the PMC contract value is at an average of 4.8% of the GDV.
The total estimated profit attributable to the group from the PMC is about RM91mil over a seven-year construction period.
As for the other two projects that it intends to start soon, the first is via its associate company, AES Builders Sdn Bhd. AES was appointed by Perbadanan PR1MA Malaysia to carry out the construction of a project worth some RM155mil.
The second job is a RM324mil contract from Damansara Realty Bhd to undertake a civil servants housing project in Putrajaya. Ong hopes to start work on both projects by year-end.
Meanwhile, Ong plans to launch OCR’s maiden project over the next few weeks. This comprised a block of serviced apartments in Jalan Yap Kwan Seng, some 700m from the Petronas Twin Towers.
“So far, we have garnered pre-launch sales of some 75%. We are very encouraged by this, considering the soft market.
“I believe that if we have the right location and launch at a competitive pricing, buyers will come,” said Ong.
OCR closed last Friday at 55.5 sen. At this price, the stock has a market capitalisation of RM144mil. It is up some 11 sen or 25.8% on a year-to-date basis.
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