Sarawak Consolidated Industries Bhd (SCIB), which had recently become a billion ringgit market capitalisation company, is aiming to double its size in the next 12 months.
The construction outfit, which is controlled by Datuk Mohd Karim Abdullah, (pic) is eyeing to take up bigger roles that include bidding for bigger infrastructure projects, embarking on mergers and acquisitions (M&As), as well as becoming project owners.
Karim acknowledged that while the Covid-19 pandemic posed challenges to the construction sector, he is confident SCIB would be able to achieve 20% to 30% revenue and profit growth this year compared with 2020. This will be driven by its strong order book and new technology adoption that will improve its profit margins.
“SCIB did very well in 2020 despite the difficult operating environment due to Covid-19.
“Moving forward, SCIB is looking at engineering, manufacturing, construction and commissioning jobs to strengthen its orderbook and capabilities in the construction sector, ” he tells StarBizWeek.
“The company has a long track record, especially in the civil engineering segment. Now we are looking at technological solutions such as 3D printing, which will reduce the dependency of foreign workers and construction time, ” he adds.
SCIB targets to commission its 3D printing facilities by May 2021. The company is engaging with the Construction Industry Development Board for the necessary approvals.It is a key player in Sarawak’s manufacturing of precast concrete products and industrialised building system (IBS) components.
IBS is a construction technique where components are manufactured in a controlled environment before they are transported and assembled into structures with minimal site work. While the concept of IBS has been around for years, the take-up rate has been slow due to its cost and availability of cheap foreign labour.
That is about to change due to the Covid-19 outbreak which has caused a shortage of foreign labour. The government had also extended tax incentives to manufacturers of IBS components under Budget 2021.
However, Covid-19 has dampened the property market which would see less new project launches moving forward.
Karim, however, reckons that the IBS technology would be driven by demand for affordable houses, an area that SCIB is targeting.“All this while SCIB has been the manufacturer of IBS systems. This is about to change as we are targeting to take part in affordable home projects, ” he says.
He says there is a mismatch in demand and supply of the residential properties and that there is a need for more affordable housing.
“Many construction companies are not the manufacturer of building materials. As such their margins are thin in the affordable housing projects. But for SCIB, we are both manufacturer and contractor and would be able to fetch higher margins, ” says Karim.
SCIB group managing director and CEO Rosland Othman says the company is expanding its services into Peninsular Malaysia, Indonesia, Qatar and Oman, as well as bidding for bigger EPCC jobs that will boost its revenue.“In the past SCIB has been very focused in Sarawak. Tapping into our track record, we are expanding our businesses outside of Malaysia to grow our order book to RM2.5bil this year, ” he says.
He adds that the group is eyeing construction jobs from projects such as the Pan Borneo Highway, Sarawak’s coastal roads and bridges and the water and power supply grid programme in the state.
SCIB has an order book of RM1.7bil which will make the company busy in the coming years. It has a presence in the Middle East through Serba Dinamik Holdings Bhd, the flagship company of Karim.
In April 2020, SCIB was awarded three EPCC projects in Oman and Qatar estimated to be worth RM864.5mil.
Karim holds a 22.53% stake in Serba Dinamik, as well as a 20.04% stake in Kumpulan Powernet Bhd, where he is deputy chairman.
Rosland owns a 9.8% stake in SCIB, while Karim is the controlling shareholder with a 47.5% interest. Karim emerged in SCIB in 2019 after he bought a 20.31 block from existing shareholders then.
For the financial year ended Dec 31,2019 (FY19) SCIB returned to the black after reporting a net profit of RM3.06mil compared to losses of RM9.79mil a year earlier.
For the first nine months of FY20, SCIB net profits jumped to RM21.78mil from RM2.2mil a year earlier.
When asked about the issues faced by several Malaysian companies in the Middle East such as payment problems for their work, Karim says that SCIB’s contracts there are relatively small, in the region of US$30mil to US$70mil.
“There are always risks when taking up projects overseas, as such, we are continuously in contact with the project owners to ensure smooth collection.
“While there are delays in the collection due to the Covid-19, we do not expect any bad debts for SCIB this year, ” he says.