HSS optimistic on govt infra spending
> Engineering consultancy firm does not expect any change post-GE14
KUALA LUMPUR: Engineering and project management consultant HSS Engineers Bhd does not expect any change in government infrastructure spending after the 14th general election.
“Looking at the Malaysian perspective, irrespective of who is in government, I think infrastructure spending will still be there. We don’t see a change in the policy of infrastructure spending,” said its executive vicechairman, Tan Sri Kuna Sittampalam.
“If you look at Selangor and Penang, infrastructure spending has been there, similar to infrastructure spending in the other states as well. We don’t see a difference,” he told reporters at its AGM yesterday.
Kuna said the group’s direction is currently more towards infrastructure in public transport as that is where the government is heading, but it foresees more water projects in its order book in the future.
“We think government infrastructure (spending) will move from public transport, and a lot more attention will be paid to water. The reserve margin of water in many states is getting critical. We think the government’s next big initiative, big spending would be in the water sector. In the future you would see probably our mix of work would not be so much transport but more water.”
The group is tendering for RM500 million worth of jobs in Malaysia and in the Southeast Asian region, across various sectors including railway, highway, infrastructure and water.
CEO Datuk Nitchiananthan Balasubramaniam said 30-40% of its tender book is water related and the group is very close to concluding a lot of its tenders.
As for its order book, he said waterrelated contracts make up about 30% of the total of RM962.5 million. The boost in water-related contracts comes from the acquisition of SMHB Engineering Sdn Bhd, which was concluded in March 2018.
“If you look at our order book for HSS alone, it is only 3% in the water sector as of December 2017. If you look at SMHB, their water represents 43% of their order book … combined, water constitutes about 30% of our order book,” he added.
Moving forward, Kuna said HSS is on the lookout for acquisitions but is in no hurry. The group has RM24 million remaining from the initial public offering proceeds, for which it revised the utilisation earlier this year.
“With the changing landscape, we have relooked it and decided we don’t need any money for the water sector because we have got SMHB. For India, we have reduced it because we have looked at a lot of companies in India and it is not to our appetite. The P/Es (priceto-earnings ratios) are very high there,” he said.
To recap, the group initially planned to spend RM15 million on expansion into India, RM6 million on the water sector in Malaysia and RM3 million on the power sector in Malaysia. This has been revised to RM5 million on expansion into India, RM3 million for the power sector in Malaysia, and RM8 million each on BIM (building information modelling) and facility management.