Group eyes more affordable housing projects in Sarawak to diversify its income base
KUCHING: ZECON BHD plans to develop more affordable housing projects in Sarawak as the group seeks to diversify its income base.
Group managing director Datuk Zainal Abidin Ahmad said construction works to build 2,330 double-storey terrace houses for civil servants in Kota Petra is expected to start in June.
The RM760.8mil project is under the Perumahan Penjawat Awam 1 Malaysia (PPAIM) scheme and is expected to be completed in four years.
“It is a low-density (eight to 10 units per acre) landed property development. To be built are 791 units of Type A (1,100 sq ft) and 1,539 units of Type B (1,300 sq ft).
“Under the provisional approval, the prices of these terrace houses shall not exceed RM300,000 per unit,” he told StarBiz.
Under the offer letter from PPAIM to subsidiary Zecon Land Sdn Bhd, the federal government will provide a facilitation fund of RM138mil to implement the project.
Meanwhile, the company is also eyeing for residential projects under 1Malaysia People’s Housing Programme or PR1MA.
Zainal said Zecon had submitted the designs for the PR1MA projects at Vista Tunku and Kota Petra.
“The company is now awaiting approval and commencement date of the project from the PR1MA board,” he said.
PR1MA Vista Tunku will involve the construction of 2,331 apartments while PR1MA Kota Petra will comprise 1,350 single and double-storey terrace houses.
Zainal said the PPAIM project would be financed with part of the proceeds from the sale of Zecon’s 49% stake in wholly-owned Zecon Medicare Sdn Bhd for RM155mil cash to Sarawak State Financial Secretary Inc, the state government’s investment arm.
Zecon shareholders gave their green light to the share sale at an EGM last Friday. The deal is expected to be completed early next month.
Zecon’s stake in Zecon Medicare will subsequently be reduced to 51%.
Of the proceeds, RM80mil is to be utilised to pare down the group’s total borrowings which stood at RM373.4mil as at March 12, 2018.
The repayment is expected to contribute to interest savings of RM4.8mil per annum.
Another RM74.8mil from the proceeds will be used for the group’s general working capital to fund the PPAIM project, Pan Borneo Highway development and upgrading work package (contract value of RM1.46bil) and construction of the Petra Jaya hospital (RM495mil).
Zecon Medicare also has a 30-year concession for the proposed children’s specialist hospital at Universiti Kebangsaan Malaysia in Cheras. The 243-bed hospital is expected to be completed in first-quarter 2019.
The children’s specialist hospital, costing RM606mil, is being built via a public-private partnership on build-lease-maintain-transfer concept. The project will also have 54 apartments to provide family-centred care.
According to Zainal, the children’s specialist hospital is now 70% completed.
“Based on the concession agreement, the hospital’s expected average revenue per annum is between RM100mil and RM150mil over 25½ years,” he said.
On the 300-bed Petra Jaya hospital, Zainal said external and auxillary works are expected to be completed by September for full completion by first-quarter 2019.
Zecon and its joint-venture partner Kimlun Corp Bhd has achieved about 19% in work progress of the Pan Borneo Highway project work package, which is from Serian roundabout to Pantu junction in southern Sarawak. The target date for completion of the package is March 2020.
Asked if Zecon has plans to further reduce its bank borrowings, Zainal said: “Zecon will continue to monetise its assets – land bank – as part of its plans to reduce the group’s gearing ratio.”
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