Prinsiptek eyes expansion of property business into Asean

SUBANG JAYA: Prinsiptek Corp Bhd, which expects stable financial performance in 2015, aims to expand its property business into other Asean countries, especially Indonesia.
"If there is an opportunity, we'll consider that," its group managing director Datuk Foo Chu Jong (pix) told Sunbiz in a recent interview.
He explained that Indonesia would be the destination of choice considering the 253 million odd population there.
Prinsiptek is already in the Thailand market, which has seen a 30% take up rate given the adoption of the build-and-sell concept there. The project was launched a year ago, with a gross development value (GDV) of RM90 million.
The property development division contributes some 40% to the group's top line, with the balance 60% from the construction segment.
Foo expects the group to increase revenue contribution from the property development segment, saying that the softening in the market currently is mainly in high-rise.
"Due to credit tightening by the bank, there must be some sort of impact on the property market, but our products are more affordable," he said.
Foo said the fact that 70% of its property project in Shah Alam were taken up by first time home buyers, reflects the existing demand in the market. Prinsiptek's properties are mostly priced below RM500,000.
Commenting on upcoming projects, Foo said the master plan for the Seri Kembangan project is yet to be ironed out, with an expected launch by year-end, while the Kajang project is scheduled to be launched next year. Both have GDVs of RM60 million respectively. Prinsiptek has over 100 acres of undeveloped landbank, mainly in the Klang Valley.
On the construction space, he said the group will be eyeing more government jobs such as the construction of hospitals and highways, with a tenderbook of between RM600 million to RM700 million.
Prinsiptek has expressed its interest in participating in the 1Malaysia Housing Project (PR1MA) through a joint venture basis.
"We're still in a discussion, we've not decided whether to go ahead with this project," he noted.
Even though construction activities are slowing down, Foo said Prinsiptek will still be able to secure some jobs given its good track record.
Foo said profit margins for some jobs have dropped due to increased labour cost, but it remains comfortable for them, ranging from single to double-digit. Prinsiptek's construction orderbook stands at over RM400 million.
Prinsiptek's net profit for the financial year ended Dec 31, 2014 rose 2.75% to RM4.67 million against the RM4.55 million it made a year ago, mainly due to the recognition of higher profit margin projects and upward revision of the profit margin of certain projects.
It achieved RM302.16 million in revenue last year, a 28.5% drop versus RM422.60 million a year ago.
Foo hopes to maintain revenue within the range of RM200 million and RM300 million for 2015.
He said the group is still looking for opportunities to embark on mergers and acquisitions (M&As) in the building materials segment, but it is yet to materialize.
Prinsiptek had said it was talking to parties that are involved in the manufacturing of construction based materials.
Last year, it undertook a rights issue exercise which raised RM34.23 million for the expansion of its property development business. He said the group may need to raise more funds if it takes on bigger jobs.