Pintaras Jaya braces for tough FY16

SHAH ALAM: Foundation and piling specialist Pintaras Jaya Bhd, which is tendering for projects worth RM800 million, expects a challenging financial year ending June 30, 2016 (FY16) but is optimistic of FY17, in view of major infrastructure projects that would augur well for the piling industry.
Its chairman and managing director Dr Chiu Hong Keong said the group’s RM800 million tender book consists of mostly private property projects for various developers mainly in Kuala Lumpur. It has an order book of RM70 million as of September that can last up to five months.
“Our order book is not that strong. At the moment, we’re trying our best to secure more works but there isn’t as much work as before. That’s why it’s tough. In piling, this is not an unusual set of circumstances because piling contracts are short and having this type of order book period (lasting five months) is quite normal for us,” he told reporters after its AGM here yesterday.
Chiu added that even with plenty of work in hand, the order book would not last more than a year.
He said one can expect margins to come down with the lack of available capacity in the market for piling due to the pull back and delay of projects.
“Our last financial year already indicated some drop in margins, mainly due to higher operational costs,” said Chiu.
However, he said that margin compression is only for a short period due to the MRT1 and MRT2 jobs that were not ongoing and were halted momentarily for a year.
In mitigating the risks, he said the group will have to relook at its cost structure, bid at more competitive prices, reducing margins and costs to retain a reasonable margin.
“FY16 will be a tough and challenging year for us. The good thing is that the MRT2 and LRT3 projects are going to be implemented on the ground so tenders for these projects should come soon. This is what we can look forward to in the future,” said Chiu.
The MRT2 and LRT3 projects have yet to open for tender but Chiu said Pintaras Jaya will bid for MRT2, LRT3 works once the tenders are open. Contribution from the MRT2, LRT3 projects will come only in FY17.
“When that (MRT2 and LRT3 projects) goes on, it will soak up capacity in the piling industry, meaning that there’ll be work and it’s positive for the piling industry,” said Chiu.
Meanwhile, he said the ringgit depreciation will only affect the group when it embarks on capital expenditure (capex) spending, as equipment is purchased from Europe and Japan. However, the group is unlikely to allocate capex for the first half of FY16, while the allocation of capex in the second half would depend on circumstances.