Zelan eyes more local contracts

KUALA LUMPUR: Engineering and construction firm Zelan Bhd, which hopes to be profitable operationally this year, is looking to bag more local contracts, including jobs at Pengerang.
Speaking to reporters after the company's AGM here yesterday, its managing director Adnan Mohammad said the group is actively tendering for new projects, but he declined to disclose the value of its tender book.
"We've been participating actively in the local market, whatever being tendered out there and some by private invitation," he noted.
On Pengerang jobs, he believes the group's advantage is its track record of building ports.
"We'll see whether we are successful in pre-qualification or even getting letter of awards," he added.
Adnan said Zelan will still depend more on government awards given that there are more opportunities in the public sector.
"Government dish out more jobs, they're the prime mover of the economy, so the government must initiate something like High Speed Rail (HSR) … For private (jobs), I think there are, but not many; the bigger projects are largely driven by the government," he explained.
Despite being profitable on a net earnings basis last year, he said more effort has to be put in to turning around its financials from the operating level.
Zelan incurred an operating loss of RM10 million last year due to some provisions made but this is expected to be reversed this year.
"We're trying to put Zelan on a firmer financial footing and secure more profitable projects … If we can secure one or two more projects, then our order book will increase," he said.
Zelan's current order book stands at RM1.1 billion, made up by four local projects.
Last year, it was awarded a RM248.7 million contract from the East Coast Economic Region Development Council for the construction of a drawbridge in Kuala Terengganu as well as bagged a RM248.49 million contract for the construction of a jetty at Pengerang, Johor.
Meanwhile, Adnan said upon completion of the International Islamic University Malaysia (Phase 3) project next year, the group will get recurring income from a 20-year concession agreement from providing asset management services.
When asked of the plan to pay dividends, he said Zelan will only consider that when it starts recording retained earnings. The company reported total consolidated accumulated losses of RM1.93 million as at end-December 2014.
"Within these two to three years, we've to strengthen Zelan's financials and address the retained earnings issue," he said.
For nine months ended Dec 31, 2014, Zelan reported a net profit of RM38.48 million compared with RM35.24 million for the full year ended Dec 31, 2013. Its financial year end has been changed to Dec 31 from March 31.