LBS streamlines construction biz
> Injecting unit into ML Global to enable entity to bid for bigger projects, especially govt jobs
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.