Mitrajaya faces intensifying competition for private sector jobs
KUALA LUMPUR: Mitrajaya Holdings Bhd (Mitrajaya) faces intensifying competition for private sector jobs, following the new government’s review and shelving of public infrastructure jobs in Malaysia.
The research arm of Hong Leong Investment Bank Bhd (HLIB Research) has turned cautious on the overall macro job flow outlook for the construction sector, following the change in government post 14th General Election (GE14),
“HSR and MRT3 have been shelved while terms of the ECRL are being renegotiated and LRT3 has been downsized due to review of mega projects,” HLIB Research said.
“As a result, about RM105 billion worth of local content of mega projects will be removed over the next two years based on our estimation.
“Although Mitrajaya is less involved with public infrastructure jobs relative to private sector jobs in the past, we reckon competition for private sector jobs will intensify going forward as other contractors start bidding more aggressively within this space.”
According to HLIB Research, Mitrajaya has only managed to secure one new contract worth RM103 million year to date (YTD).
The research arm noted that Mitrajaya’s order book now stands at circa RM1.5 billion, translating to 1.5-fold cover on financial year 2017 (FY17) construction revenue.
“Mitrajaya has bid for RM3 billion worth of jobs comprising mostly building works (RM2.9 billion) and the balance infrastructure project.
“Management is targeting to secure another RM900 million worth of jobs for FY18,” it said.
However, the research arm maintained its order book replenishment assumption of RM250 million given the limited job wins YTD and the slowing in contract flows following the change in government.