Secures 26 New Projects with Total Contract Value Exceeded HK$1.0 Billion;
Strong Project Pipeline Carries Order Book with Total Value of HK$5.0 Billion;
Outstanding Order Book at HK$2.3 Billion
HONG KONG – (ACN Newswire) – BGMC International Limited (“BGMC” or the “Company”) and its subsidiaries (collectively the “Group”) (HKEX: 1693), a Malaysia-based construction services company, has announced its annual results for the financial year ended 30 September 2018 (“FYE2018”).
During FYE2018, the Group’s revenue was RM515.1 million (approximately HK$983.8 million) (FYE2017: RM694.9 million), with gross profit amounted to RM52.3 million (approximately HK$99.9 million) (FYE2017: RM128.1 million). The less-than-stellar results were mainly due to the lag in time of recognising income from the order books, as the projects in hand are still in early stages which are expected to bear fruit in following years. Nevertheless, the on-going projects in pipeline will drive the Group’s growth in coming years and will be able to deliver optimum returns to shareholders in long run. Profit attributable to owners of the Company stood at RM1.5 million (approximately HK$2.9 million) (FYE2017: RM54.8 million) after a goodwill impairment of RM2.3 million pertaining to the Company’s subsidiaries is recognised during the year and an increased staff costs of RM8.1 million (approximately RM15.5 million) which was mainly attributable to addition to the Group’s headcount during the year to cope with expanded projects activities.
Although the Group’s recorded revenue for FYE2018 was not apparently lustrous, its customer base, revenue streams and order books has remained solid, and numerous new projects from established property developers as well as government-linked companies were secured. During FYE2018, BGMC has won 26 new project contracts of total worth RM537.6 million (approximately HK$1.0 billion). Notable projects include construction of Bangsar 61 Basement Works in Kuala Lumpur (for Pelaburan Hartanah Berhad), and Building Works for a Combined Cycle Gas Turbine Power Plant at Melaka (for Hyundai Engineering Malaysia).
CONSTRUCTION SERVICES SECTOR
As the main revenue contributor, construction services sector has recorded revenue of RM502.7 million (approximately HK$960.2 million) in FYE2018, accounted for 97.6% of the Group’s total revenue, as compared to RM684.1 million in previous year.
Building and Structure
Building and Structure segment contributed revenue of RM395.6 million (approximately HK$755.6 million) in FYE2018 (FYE2017: RM530.0 million), with all the major projects undertaken by the segment are still in progress during the year. In the meantime, 7 new contracts of total worth RM439.0 million (approximately HK$838.5 million) were secured during FYE2018. The single largest contract procured in the year was the Bangsar 61 project which amounting to RM273.6 million (approximately HK$522.6 million). Total value of the segment’s outstanding order book as at 30 September 2018 is at a sustaining level of RM914.6 million (approximately HK$1.8 billion).
Energy Infrastructure
Energy Infrastructure is the new name of the segment previously known as Energy Transmission and Distribution in order to better reflect the expanded scope of work of the segment. This segment recorded revenue of RM40.1 million (approximately HK$76.6 million) in FYE2018 (FYE2017: RM56.2 million). The lower revenue was mainly due to some of the newly awarded projects that are still in infant stage with minimal or nil revenue contribution. The segment has procured 3 contracts with total value of RM31.1 million (approximately HK$59.4 million) during FYE2018, and maintained its outstanding order book of RM96.7 million (approximately HK$184.7 million) as at 30 September 2018.
Mechanical and Electrical
In FYE2018, revenue from the Mechanical and Electrical segment has rose 20.2% to RM45.2 million (approximately HK$86.3 million) (FYE2017: RM37.6 million), mainly benefited from projects like The Henge and D’Pristine Medini which is near to its completion. The segment also won 15 new contracts of total worth RM31.6 million (approximately HK$60.4 million) in FYE 2018, giving it a healthy outstanding order book of RM116.1 million (approximately HK$221.8 million) as at 30 September 2018.
Earthwork and Infrastructure
Earthwork and Infrastructure segment has recorded revenue of RM21.8 million (approximately HK$41.6 million) in FYE2018 (FYE2017: RM60.3 million). The low outstanding contract sum of and fewer new tender wins in the previous year explained the decreased activities and hence revenue of the segment in this year.
Nevertheless, the segment was able to secure one new contract of RM36.0 million (approximately HK$68.8 million) in FYE2018 which covers Earthworks, Soil Improvements Works, Instrumentation Works and Associated Works at Kuala Langat. The outstanding order book of the segment stood at RM29.3 million (approximately HK$56.0 million) as at 30 September 2018.
CONCESSION AND MAINTENANCE SERVICES SECTOR
In FYE2018, this sector recorded an imputed interest income (from the availability charges of a concession agreement) of RM43.1 million (approximately HK$82.3 million) as compared to RM43.7 million in FYE2017, and the asset management service charges of RM10.9 million (approximately HK$20.8 million), surpassing RM10.5 million recorded in FYE2017.
As at 30 September 2018, the concession with UiTM had an outstanding availability charges of RM829.7 million (approximately HK$1.6 billion) receivable over the next 17 years and 4 months of the remaining concession period, while the maintenance services had an outstanding contracts valued at RM184.0 million (approximately HK$351.4 million).
On 12 December 2017, BGMC announced that it has secured a concession to construct and develop a Large Scale Solar Photovoltaic Plant (“LSSPV”) of 30.00 Megawatt Alternate Current at Kuala Muda, Negeri Kedah, Malaysia (“LSSPV Plant”). Subsequently, on 27 March 2018 and 24 April 2018 respectively, the Group has signed a 21-year Power Purchasing Agreement (“PPA”) with Tenaga Nasional Berhad (“TNB”), the sole electricity distributor in Peninsular Malaysia, and received the Letter of Award from the Energy Commission of Malaysia (“EC”).
The Group is working towards the financial closure for the concession and is on its track to achieve the Commercial Operation Date (as defined in the Company’s announcement on 27 March 2018) of the LSSPV Plant of 30 September 2020, after which it will be able to generate recurring income from the LSSPV Plant for a period of 21 years by virtue of PPA signed with TNB.
PROSPECTS
BGMC sees rosy prospects for its businesses. Recently, Malaysian Government has stated its intention to increase the share of renewable energy in the country’s energy supply mix from the current 2% to 20% by year 2025. This development will translate into abundant opportunities for BGMC, proving its capability to build, maintain, and operate renewable energy power plant. EC is expected to launch another cycle of LSSPV plant tenders in 2019 and the Group is ready to compete for the tender. Moreover, Malaysian Government targets to establish a more regulated and sustainable structure for initiating and implementing Public Private Partnership (PPP) projects. All these developments are in favour of BGMC.
Subsequent to FYE2018, the Group has won yet another sizeable project from MRCB Builders Sdn Bhd (“MRCB Builders”), an engineering and construction arm of Malaysian Resources Corporation Berhad, a testament to its strong customer base. The Group landed a sub-contract with MRCB Builders, the main contractor of a proposed 46-storey commercial development in Kuala Lumpur, and will undertake structural and architectural works for Tower 2 and 3 of this project with an estimated sub-contract sum of RM189.0 million (approximately HK$361.0 million). The tentative commencement dates of the project are mid-December 2018 for Tower 2 and mid-March 2019 for Tower 3. This project is scheduled to be completed on 1 November 2020.
Moving forward, BGMC will continue to optimise its productivity and continuingly replenish its construction service order book, by tender for projects in the corporate sector, property sector (residential and commercial), industrial sector, government-linked projects and infrastructure projects in Malaysia. At the same time, it will be looking at pursue potential growth opportunities via strategic partnerships to enrich project portfolio, enlarge business footprint across the region, and thus increase market share in near future.
Tan Sri Barry Goh, Chairman and Executive Director of BGMC, said, “With strong fundamentals and proven expertise, BGMC is well-poised to capture opportunities in the country transforming with vigour. We shall strive to heighten operational efficiency and boost competitiveness, which we believe will enable us to keep growing and create maximum shareholder value.”
As at 30 September 2018, BGMC’s construction services order book carried a total value of RM2.6 billion (approximately HK$5.0 billion), and outstanding order book stood at RM1.2 billion (approximately HK$2.3 billion).
Top 5 Ongoing Projects / Contract Value
D’Pristine Medini: Construction of a mixed development consisting of a 3-storey retail unit, a 6-storey car park, a 23-storey office tower, a 28-storey SOHO tower, a 29-storey SOHO tower and a 27-storey hotel tower at Medini Iskandar, Johor: RM580,000,000 / HK$1,107,800,000
The Sky Seputeh: Construction of two 37-storey towers consisting of 290 apartment units, car parks and other facilities at Taman Seputeh, Wilayah Persekutuan, Malaysia: RM292,020,000 / HK$557,758,200
Bangsar 61: Construction of Earthworks, Basement and Associated Works for a 4-storey basement car park at Bangsar, Kuala Lumpur, Malaysia: RM273,674,000 / HK$522,717,340
Setia Spice: Construction of a 26-storey building with a 19-storey hotel (453 rooms), a 3-storey car park and 4-storey hotel facilities, plus a 2-storey basement car park at Setia Spice, Bayan Lepas, Penang, Malaysia: RM209,488,000 / HK$400,122,080
TNB Worker’s Quarters: Construction of one 8-storey block of executive Quarters (24 units), three 9-storey blocks of non-executive Quarters (160 units) and other facilities at Kuala Berang, Terengganu: RM76,531,000 / HK$146,174,210
About BGMC International Limited
Founded in 1996, BGMC International Limited is a construction services company based in Malaysia. With an operating history of over 20 years, it provides a wide range of construction services to customers. Armed with experience and expertise in construction services, the Group is capable of undertaking public private partnership (PPP) projects based on the Build, Lease, Maintain and Transfer (BLMT) model that can allow it to generate long-term recurring cash flow.
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