LBS stream­lines con­struc­tion biz

> In­ject­ing unit into ML Global to en­able en­tity to bid for big­ger projects, es­pe­cially govt jobs

The Sun (Malaysia) - - SUNBIZ - BY EE ANN NEE

KUALA LUMPUR: LBS Bina Group Bhd, which is re­or­gan­is­ing its con­struc­tion di­vi­sion by in­ject­ing con­struc­tion unit MITC En­gi­neer­ing Sdn Bhd (MITCE) into its 51.18%-owned sub­sidiary ML Global Bhd, wants to grow ML Global into one of the ma­jor con­struc­tion arms in the coun­try.

LBS and ML Global man­ag­ing di­rec­tor Tan Sri Lim Hock San ( pix) said MITCE has ten­dered for RM639 mil­lion worth of jobs and is close to se­cur­ing some deals. It has an or­der book of RM1.5 bil­lion con­sist­ing of 62% from LBS and 38% from ex­ter­nal par­ties. Formed in 2007, it has also com­pleted RM1.15 bil­lion worth of jobs.

When asked if LBS would con­sider pri­vatis­ing ML Global in the near fu­ture, Lim said “don’t think so”, ex­plain­ing that it does not fore­see do­ing so after tak­ing the ef­fort to in­ject MITCE into ML Global.

“Not for the next five years (of pri­vatis­ing ML Global),” Lim told a press brief­ing here yes­ter­day after an­nounc­ing the pro­posed dis­posal of MITCE to ML Global.

LBS’s unit MITC Sdn Bhd is dis­pos­ing of its 75% stake in MITCE to ML Global for RM225 mil­lion, which will be sat­is­fied by the al­lot­ment and is­suance of 200 mil­lion shares of 50 sen each in ML GLobal at an is­sue price of 67 sen per share; and 135 mil­lion new ir­re­deemable con­vert­ible pref­er­ence shares (ICPS) of 50 sen each in ML Global at an is­sue price of 67 sen per ICPS.

The re­main­ing 25% stake in MITCE is owned by Lim Lit Chek, and will also be dis­posed to ML Global in lieu of shares in ML Global.

The pro­posed dis­posal is be­ing un­der­taken as part of LBS’s plan to stream­line its con­struc­tion busi­nesses un­der ML Global by con­sol­i­dat­ing the re­sources of ML Global and MITCE for greater op­er­a­tional and fi­nan­cial ef­fi­ciency.

The com­bined con­struc­tion busi­nesses of LBS un­der ML Global will have bet­ter ac­cess to larger scale of busi­ness op­por­tu­ni­ties and pro­vide ML Global with the abil­ity and plat­form to ten­der for larger scale ex­ter­nal con­struc­tion works, which in turn is an­tic­i­pated to im­prove its or­der book and earn­ings.

“We can go in a big way to par­tic­i­pate in govern­ment jobs,” said Lim.

Fol­low­ing the trans­fer of shares to MITC and Lim, both will place out up to 60 mil­lion shares to in­de­pen­dent third party in­vestors to en­sure that at least 25% of ML Global’s shares are in the hands of pub­lic share­hold­ers.

Mean­while, Lim said LBS ap­plauds the pro­posal to al­low prop­erty de­vel­op­ers to ob­tain money lend­ing li­cences to of­fer fi­nanc­ing to home buy­ers but stressed that it is up to de­vel­op­ers to take it up.

De­scrib­ing the idea as “over­sold”, he said some de­vel­op­ers have been of­fer­ing fi­nanc­ing to home pur­chasers on a low scale ba­sis.

“We ex­pect pur­chasers to get loans from banks. But there are sev­eral cases where the de­vel­op­ers know the pur­chasers well who are not qual­i­fied (for bank loan), so maybe we can con­sider giv­ing them loans. As a de­vel­oper, we don’t use it (fi­nanc­ing) as a main busi­ness. We are sell­ing houses,” Lim ex­plained.

LBS is not of­fer­ing loans to home buy­ers cur­rently but is look­ing at of­fer­ing fi­nanc­ing when it is ready.

Lim said it has achieved RM873 mil­lion sales so far and is con­fi­dent it will meet its sales tar­get of RM1.2 bil­lion this year.

Its un­billed sales stood at RM1.39 bil­lion, which will trans­late into rev­enue and profit within these two years. It has a land bank of 3,585 acres with a po­ten­tial gross de­vel­op­ment value of RM24.7 bil­lion that will last the group a decade.

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