PETALING JAYA: TCS Group Holdings Bhd is stepping up efforts to secure more infrastructure jobs to enlarge its revenue base.
Although the building construction business, which is the mainstay of TCS, will continue but over the long term, the direction of the company will be centred on infrastructure jobs to broaden its earnings base.
Group managing director Datuk Tee Chai Seng (pic) told StarBiz that after having established TCS’ presence and track record in building construction, moving into the infrastructure segment was a natural progression to expand its scope and diversify its revenue stream.
“Furthermore, infrastructure projects offer higher profit margins in general as compared to building construction projects.
“Hence, we are working towards further enhancing our foothold in the infrastructure segment by tendering for more jobs in this segment.
“In addition, the infrastructure arm will also improve our long-term stability as we reduce our reliance on the building segment, ” he said.
The group’s current tender book stands at close to RM2.4bil, Tee said and out of this, about 70% of the tenders are for building contracts while the remaining 30% are for infrastructure contracts.
He added that based on the breakdown, TCS is stepping up efforts to secure more infrastructure contracts.
Historically, the group has a success rate of around 20% to 30% and it expects to maintain a similar tender success rate going forward.Listed on the ACE Market in 2020, the group clinched its maiden infrastructure contract for the West Coast Expressway in April.
Tee said despite the challenging business environment, he did not anticipate the group’s earnings to be significantly impacted.
The company has tendered for some residential, institutional building andinfrastructure projects.
The emphasis for tenders would be limited to Malaysia as opportunities abound for construction and infra jobs.
Recently, TCS clinched its single-largest contract worth RM555mil for a mixed development project in Setapak, Kuala Lumpur known as J.Satine.
It is a joint venture project between Platinum Victory Group and Jakel Group’s property development arm.
Year-to-date, Tee said the company has secured four contracts worth a total of RM841.1mil.
These new projects have boosted the group’s order book to about RM1.6bil and will provide clear earnings visibility over the next three years.
“While we are fully aware of the near-term challenges, we are confident on our longer term prospects. We are still actively participating in a number of tenders, and hope to share more good news in time to come.
“Looking into 2022 and beyond, we believe we can deliver good results and value to our shareholders, underpinned by our strong order book and tender book, ” he added.
As to whether the rise in input cost, which has been a huge challenge for many construction players, has impacted TCS, Tee said there would be some impact on the margin.
However, he said the situation is under control.
“For example, steel prices have gone up quite a bit over the last few months, but the usage of steel in construction varies depending on the completion stage.
“And our projects are at various stages of completion, so the exposure is manageable.
“We are also adjusting our procurement process and improving our operational efficiency, ” he noted.