Taliworks eyes M&As, new highway proposals

KUALA LUMPUR: Taliworks Corp Bhd is looking at mergers and acquisitions (M&As) as well as new highway proposals following the discontinuation of toll collection at certain stretches of the Cheras-Kajang Highway, said its executive director Ronnie Lim Yew Boon.
"Definitely we'll explore all possibilities of M&As or a new highway proposal. We're actively pursuing it and will announce it at the appropriate time," he told reporters after its AGM yesterday.
The interest in M&As is part of its inorganic growth strategy, which includes diversifying into the green energy business.
"We're looking into areas like green energy in the future as well. When we talk about green energy, we're not talking about just Malaysia, we're talking about the global market," said its chairman Tan Sri Ong Ka Ting.
He said it is looking to enter the green energy business in terms of infrastructure. However, water treatment, supply and distribution remains its core business and accounts for the bulk of its revenue.
"It's quite obvious in water operations that the account receivables is the biggest challenge now. But if you look at news recently, we're quite optimistic that the problems on the Selangor water concession will be resolved," said Lim.
In China, Taliworks recently signed a heads of agreement with the Yinchuan City Construction Bureau for upgrading and expansion works on Yinchuan Waste Water Treatment Plants, where it has planned RMB900 million worth of capital expenditure to be invested in stages up till 2017.
"Currently it (China) contributes about RM30 million to RM40 million, so its probably about 10% to revenue. Going forward we look to increase that percentage," said its group finance general manager Victor Wong.
He said with the upgrading and expansion works, production levels have gone up. Combined with the higher tariff rates, contribution from its operations in China is expected to increase.
"We don't have a specific target but we are putting in a lot of investments in China so we expect it to contribute more," he said.
Lim said it is also looking to expand its business to more "advanced markets" and "developed countries", especially markets that can generate steady cash flows. "We're not looking at emerging markets at the moment," he added.
Taliworks expanded into the highway business in 2007 via the acquisition of a 55% stake in Cerah Sama Sdn Bhd, an investment holding company of Grand Saga Sdn Bhd which operates the Cheras–Kajang Highway. Toll collection at certain parts of the highway was abolished in March 2012.
For the first quarter ended March 31, 2014, Taliworks posted a lower net profit of RM3.75 million, down 33.42% from RM5.64 million a year ago. Revenue rose 16.97% to RM75.60 million from RM64.64 million a year ago.