Earthworks and civil engineering services specialist Advancecon Holdings Berhad is aiming for a construction orderbook of RM1 billion, in light of ongoing tenders for earthworks and civil engineering works for infrastructure projects in East Malaysia.
Advancecon has substantial manpower and machinery fleet in Sarawak, which are currently undertaking earthworks and civil engineering works for Pan Borneo Highway Sarawak, new roads in Sarawak under the Upper Rajang Development Agency, and an iron and steel production complex for Wenan Steel in Samalaju Industrial Park.
Phum Ang Kia, Group Chief Executive Officer of Advancecon Holdings Berhad said, “We are steadily reinforcing our portfolio in undertaking projects to support the infrastructure and development space in East Malaysia. The most recent contract win for Wenan Steel, which is the Group’s single-largest earthworks undertaking, indicates the scale of projects and the potential growth there.
This track record augurs well for our tender prospects in East Malaysia, which accounts for around 60-70% of our tenderbook and includes Pan Borneo Sabah packages. Along with other ongoing bids for East Coast Rail Link (ECRL) projects and Jabatan Kerja Raya works, we are optimistic of our prospects and are targeting RM1 billion outstanding order book, from RM811.6 million as at 31 March 2021.
Simultaneously, economic activities being allowed to operate throughout the current Movement Control Order would help us improve our machinery utilisation rate to around 80% across Peninsular and East Malaysia. This would ensure fewer disruptions in the progress of projects and financial performance.”
Apart from the projects in Sarawak, Advancecon’s RM811.6 million orderbook as at March 31 includes major infrastructure projects of West Coast Expressway, ECRL, as well as property developments including Setia Alamsari and Bandar Bukit Raja 2.
Advancecon recorded stable revenue of RM65.1 million in 1Q21, of which RM63.5 million was from the construction and support services segment, while the solar energy segment reported revenue of RM1.4 million. The balance was derived from property investment. Comparatively, the Group reported revenue of RM66.3 million in the previous year’s corresponding quarter.
However, 1Q21 net profit decreased 50.5% to RM1.1 million in 1Q21 from RM2.2 million previously on lower utilisation of machinery, as well as higher margin construction projects undertaken in the previous corresponding quarter compared with 1Q21.
In March 2021, Advancecon was selected as one of the successful bidders for the LSS4 programme by the Energy Commission of Malaysia. The Group will undertake the development of a large scale solar photovoltaic plant with generation capacity of 26 megawatts. Commercial operations for the plant are expected to commence by 2023, with positive contributions to the Group’s earnings expected thereafter.
At the same time, the Group recently commenced the Power Purchase Agreements (PPA) with Oon Corp Resources (M) Sdn Bhd after completing the solar installations, and are making progress for the solar installations on the premises of Prominent Image Sdn Bhd and Jemco Sdn Bhd.
On the Group’s solar segment, Phum said, “In 1Q21, we recorded our second consecutive quarter of revenue contribution from our solar energy segment. Keeping in mind the progress of our PPA agreements and the upcoming works for the LSS4, we expect to recognise firmer earnings from this segment going forward.”