Gadang bidding for RM6b jobs

GADANG Holdings Bhd, a construction and property group, is bidding for some RM6 billion worth of infrastructure and construction contracts in the country and the Middle East, to ride out the global economic downturn.

It is bidding for an estimated RM4 billion worth of government jobs and private finance initiative (PFI) projects in Malaysia, and over RM2 billion worth of projects in Abu Dhabi in the United Arab Emirates.

Managing director and chief executive officer Tan Sri Kok Onn said Gadang expects to sign a pact with a partner in Abu Dhabi soon to work jointly on the projects there.



Abu Dhabi will be a new growth area for Gadang, which has been scouting for jobs there in the last two years.
Apart from Malaysia and the Middle East, the main board-listed firm is also exploring for infrastructure work to build water treatment and power plants in Vietnam and Indonesia.

It wants to be proactive in building its construction, property and utilities divisions despite concerns over the global financial market.

"We will grow the businesses cautiously. While there are lucrative projects in the pipeline in Malaysia and overseas, we will study the jobs first before making submissions," he told Business Times in an interview.

Kok said Gadang will remain resilient against the current market challenges and will continue to put in place various measures to reduce the impact of rising prices of construction materials on the operating margins.

The group hopes to do better financially this year, supported by its two ongoing contracts worth RM716 million to build the Kemuning-Shah Alam highway and the Cheras Rehabilitation Hospital.

Kok said its four water-supply concessions in Indonesia will also add to the group's revenue.

It also expects higher earnings from its property division, which has been enjoying brisk sales.

"Demand for cheaper housing has been on the uptrend. Buyers are looking for affordable homes in these trying times. We will continue to build them so long as there is continued demand," Kok said.

Gadang's construction orderbook stands at some RM550 million, with unbilled property sales worth RM50 million.

For the financial year ended May 31 2008, Gadang saw a 42.4 per cent drop in net profit to RM7.95 million, from RM13.80 million a year ago.

Revenue was RM172.50 million, down 23.7 per cent from RM225.96 million.

By Business Times (by Sharen Kaur)

Magna Prima cuts target

MAGNA Prima Bhd, whose luxury homes fetched record prices last year, slashed by almost half projected revenue from its biggest development as the global recession cuts demand for retail property.

Magna Prima will remove a mall and hotel from its Magna City project in northern Kuala Lumpur and focus on apartments, shops and offices, chief executive officer Lim Ching Choy said.

Lim cut his sales forecast from the development to RM600 million from RM1.1 billion.

"We have to reposition our direction," Lim, 47, said in an interview on Monday in Petaling Jaya. The "downscaling" will help Magna Prima "manage sales according to market conditions".
A worldwide recession has triggered real-estate slumps from the Netherlands to New Zealand, and IJM Corp and Berjaya Land Bhd are among Malaysian developers reported to have shelved projects.

The Southeast Asian nation's government expects the slowest growth in eight years in 2009, and Lim said it may be 18 months before the economy rebounds.

Lim said the profitability of the Magna City project, scheduled to be introduced in the first quarter of 2009, won't be affected by the cutback. He's seeking a profit margin of between 25 percent and 30 percent from the development.

The recession might also offer takeover opportunities because valuations have fallen, he said. The company plans to double its cash reserves to RM100 million in the next 11/2 years for property acquisitions that can be injected into a real-estate investment trust, Lim said.

By Bloomberg

Magna City project to be downsized

PETALING JAYA: Magna Prima Bhd has downsized its Magna City project in Kuala Lumpur to RM600mil from RM1.1bil in gross development value (GDV) due to slowing growth, according to chief executive officer Lim Ching Choy.

“In view of the slowing economy, we reposition our development to suit the market demands,” Lim told StarBiz. “We (downsized) the development because we anticipated that the retail mall business would be tough going forward.”

Lim said the decision would also “lighten up” the company’s cash position, adding that the project’s profit margin could be maintained at 25% to 30% of sales value.

“Magna Prima is able to retain a healthy profit margin because we may not keep any of the assets in the amended RM600mil (project),” he said, revealing that the company had planned to retain 45% to 55% of the original project.

As of end of October, the group had RM230mil in unbilled sales.

The Magna City will have over 1.6mil square feet of net floor area while the construction is targeted to commence in the middle of 2009.

It sits on 10.23 acres of freehold land comprising 67 units of lifestyle shop offices, two levels of retail lots, two levels of corporate offices and 800 units of service apartments.

By The Star (by Law Kai Chow)