Bina Puri mulls rights issue to reduce gearing

SELAYANG: Bina Puri Holdings Bhd is considering a rights issue to reduce its gearing to about 1.5 times from almost 3.0 times currently, said its group executive director Datuk Matthew Tee.
“There will be a corporate exercise to address this issue. As you can see our market capitalisation is only about over RM100 million against construction book order of RM1.9 billion and our GDV (gross development value) is RM3.5 billion, so you can see we are very much under-capitalised. There will be corporate exercise to address this, to reduce the gearing,” he told reporters at its AGM yesterday.
“We are exploring rights issue. That could be one. We have been doing placement, so far luckily for us, every year we manage to place out our mandate. We have been going to the market … the last time we went to shareholders for a rights issue was in 2003. I think it is about time to go back. We are exploring this path,” Tee added.
He said the group’s gearing would also be reduced slightly after the listing of its power supply division PT Megapower Makmur in Indonesia on July 5.
Bina Puri has 80% interest in the company, which supplies micro power services to PT Perusahaan Listrik Negara. Post listing, the interest will be reduced to 56%.
After listing, Tee said, the Indonesian subsidiary will generate more than RM20 million revenue to the group. It also hopes to improve the bottom line by 20-30% this year, especially with the hydro power plant which just started operations this year.
For the construction sector, the group has an order book of RM3.1 billion, of which RM1.9 billion is still unbuilt and is expected to last the group until 2019. Based on its track record, the group’s order book replenishment is about RM1 billion a year, out of RM5 billion to RM10 billion worth of jobs tendered every year.
“Under the 11th Malaysia Plan, more projects will be awarded and the construction sector will be a beneficiary. This year is exceptional for us, we have not secured anything yet. Hopefully, the second half of the year will be better,” said Tee.
For the property sector, he said the group aims to double its property sales this year from RM90 million last year to almost RM200 million this year.
“What we have launched we will continue. What we have not launched we will adopt a wait-and-see approach. There is no rush … upcoming launches this year will probably be Cheras Pertama (GDV RM250.34 million) and Phase 1A1 of Taman Nusa Damai in Johor (GDV RM204 million),” Tee said.
On its highway concession, the KL-Kuala Selangor Expressway (LATAR) saw the opening of the Bandar Tasik Puteri Interchange yesterday. The interchange is expected to improve traffic performance and serve the 60,000 residents of Bandar Tasik Puteri.
Tee said LATAR is on track to be profitable by 2020.
“For 2016, performance was not as good as 2015. You can see most of the corporate sectors, especially the construction sector, were quite badly hit. We hope 2017 will be a better year than 2016,” he added.