Ikhmas Jaya to be com­pen­sated

MD says ter­mi­na­tion of con­tract for Met 1 project is mu­tu­ally agreed upon

The Star Malaysia - StarBiz - - Companies & Strategies - By IN­TAN FARHANA ZAINUL in­tan­[email protected]­tar.com.my

THE KL Me­trop­o­lis, a 75.5 acres mixed-de­vel­op­ment project by Naza TTDI, may see a po­ten­tial Chi­nese con­trac­tor tak­ing part in its con­struc­tion and fi­nanc­ing, ac­cord­ing to a source.

“Naza TTDI is work­ing with a po­ten­tial con­trac­tor from China for the con­struc­tion of the en­tire project and this in­cludes fi­nanc­ing of the project as well,” the source says.

The project is said to have an es­ti­mated gross de­vel­op­ment value (GDV) of RM20­bil, lo­cated at a sweet spot in the up­mar­ket of prime res­i­den­tial and com­mer­cial cen­tres such as Mont Kiara, Pub­lika, Da­mansara Heights and Bangsar in Kuala Lumpur.

The po­ten­tial Chi­nese part­ner sur­faced after one of the con­trac­tors for a de­vel­op­ment within the project saw its con­tract ter­mi­nated.

The ac­tion has raised many eye­brows, es­pe­cially since the work was al­ready 81% com­pleted.

Ikhmas Jaya has an­nounced in a fil­ing with Bursa Malaysia that it had re­ceived a let­ter from TTDI KL Me­trop­o­lis, a unit of Naza TTDI, ter­mi­nat­ing a con­tract for earth­works, pil­ing and sub­struc­ture for a project in the KL Me­trop­o­lis.

The com­pany said the earth­works are for a 59-storey res­i­den­tial tower, two blocks of of­fice tow­ers and two re­tail malls with a gross de­vel­op­ment value of RM1.3bil.

The said project is known as Met 1, part of the larger KL Me­trop­o­lis de­vel­op­ment that is cur­rently un­der­taken by Naza TTDI.

Over­all, the de­vel­op­ment of the KL Me­trop­o­lis is di­vided into precincts: Met 1 to Met 9, span­ning over 15 years.

Naza TTDI has roped in three-joint ven­ture part­ners namely Hap Seng Land De­vel­op­ment Sdn Bhd, Triterra Me­trop­o­lis Sdn Bhd, and Nus­metro Sdn Bhd to de­velop part of the KL Me­trop­o­lis.

In an email re­ply to StarBizWeek , Naza TTDI Sdn Bhd se­nior project di­rec­tor Khoo Thian Shyang says the ter­mi­na­tion of the pil­ing work was due to a de­lay in the project progress and at the same time, the con­tract has ex­pired.

“To pre­serve the best in­ter­est of our stake­hold­ers, we have to ter­mi­nate the con­tract and to have the main con­trac­tor take over the re­main­ing works,” he said.

De­spite the ter­mi­na­tion of the pil­ing job, Khoo says the Met 1 de­vel­op­ment will con­tinue and the res­i­den­tial por­tion is ex­pected to be com­pleted in 2021.

Mean­while, Ikhmas Jaya group man­ag­ing di­rec­tor Datuk Ang Cheng Siong says the firm will be com­pen­sated and paid ac­cord­ingly in “eq­ui­table, fair and jus­ti­fi­able man­ner as per the terms and con­di­tions of the con­tract or let­ter of award.”

The event saw a knee-jerk re­ac­tion on Ikhmas Jaya, which fell 4% to 12.5 sen be­fore re­cov­er­ing 8% to 13.5 sen yes­ter­day.

The to­tal con­tract, which was clinched in Novem­ber 2016, is val­ued at RM57.8mil with the bal­ance of work to be car­ried out worth RM11mil.

In an an­nounce­ment back in 2016, it said that the pil­ing work is ex­pected to be com­pleted in July 2017.

When asked about the rea­sons for the con­tract ter­mi­na­tion, Ang says it is a “mu­tual ter­mi­na­tion”.

He says the firm has one project with TTDI KL Me­trop­o­lis.

Cur­rently, he points out, Ikhmas Jaya is sit­ting on an or­der book of RM800mil, which will last the com­pany for two to three years.

“The com­pany is cau­tiously op­ti­mistic given its track record and ex­per­tise in in­fra jobs such as roads, bridges, wa­ter sup­ply, pil­ing and foun­da­tion works,” he says.

Ikhmas Jaya shares have fallen more than 76% in the last one year.

For the third quar­ter ended Sept 30, 2018, Ikhmas Jaya went into the red post­ing losses of RM4mil from RM11.3mil a year ago due a pro­vi­sion for im­pair­ment charge it made on con­tract as­sets and trade re­ceiv­ables amount­ing to RM9.9mil.

Rev­enue for the quar­ter was higher at RM67.1mil com­pared with RM60.6mil pre­vi­ously thanks to a num­ber of con­struc­tion jobs.

Ang: The com­pany is cau­tiously op­ti­mistic given its track record and ex­per­tise in in­fra jobs.

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