Company of the year

By KINIBIZ

The breathtaking speed of Eco World’s ascendance up the property food chain had been remarkable to watch in 2014, accomplishing in months what many others would have taken years to duplicate.

While Eco World is KiniBiz’s pick for company of the year, there were other contenders worth looking at too, namely UMW Oil & Gas, Boustead, SapuraKencana, and Gamuda.

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 The whirlwind that is Eco World

After a backdoor listing that set the market abuzz in late 2013, Eco World Development Group Bhd hit the ground running this year, essentially emerging overnight to stand among the big boys of Malaysian property scene.

And the speed of which Eco World had been built up as a corporate big-hitter is remarkable. In a matter of months, Eco World had established itself as a brand and developer to be reckoned with, no mean feat compared to the years it would have taken to do so in a more traditional route.

It began with the incorporation of the company in 2012 as Maple Quay Sdn Bhd, though this name was changed into Eco World Development Sdn Bhd (EWDSB) the following year shortly before a reverse take-over exercise (RTO) of then-Focal Aims Holdings Bhd commenced in September 2013.

This shortened the time it took for Eco World to become a listed entity as it would have to undergo a lengthy initial public offering (IPO) process otherwise.

However the next step came in April this year, four months after the RM230.7 million takeover culminated in a name change to Eco World in December 2013, when the company announced a massive assets injection exercise by its major shareholder EWDSB.

The exercise will see Eco World’s land bank more than triple to 4,433 acres with a total gross development value (GDV) of RM43.5 billion. While the exercise is only expected to be completed next year, the one-shot injection firmly places Eco World among the likes of SP Setia and IJM Land, whose land banks are also around the 4,000-acre mark.

Furthermore, the announcement of the assets injection exercise precluded the emergence of property veteran Liew Kee Sin, who built up the SP Setia brand over nearly two decades with his trusted lieutenants, in Eco World’s board room in early May to join his son Liew Tian Xiong.

This reaffirmed the much-celebrated “SP Setia genetics” in Eco World, which already has a board lineup and senior management team that brings a sense of deja vu for those who had been following SP Setia’s own ascendance over the years.

The cumulative track record and experience behind the company’s bigwigs counts for much in fast-tracking Eco World up the property food chain in such a hurry.

In fact the weight of reputation behind newcomer Eco World’s rapid rise was encapsulated in its partnership with UDA Holdings Bhd and the Employees Provident Fund (EPF) to redevelop the former Pudu Jail site as Bukit Bintang City Centre.

“Both Eco World and EPF have an excellent record in developing projects and that is why we have entered into a venture to develop the Bukit Bintang City Centre with them,” UDA chairperson Johari Abdul Ghani was quoted as saying.

In terms of sales, Eco World had already clocked in some RM2.1 billion in sales for the first eight months of 2014, according to board member Liew senior in a radio interview in September. By end-October, a 13-month period due to its change in financial year-end, Eco World clocked in a total of RM3.02 billion, the company said.

And now the company’s big aim of RM5-billion sales target over 2014 and 2015, said chief executive officer Chang Khim Wah in April, seems easily surpassable at this rate.

Being able to sell its properties at such a pace marks the strength of the market’s faith in Liew Kee Sin and co’s reputation and brand name given Eco World as a brand in itself had only emerged last year.

That said, Eco World’s financial results do not yet reflect the strength of its sales prowess, but this should come in time after the assets injection exercise completes.

The one potential negative is news in October of Liew Kee Sin’s proposed blank-cheque listing of a property-focused special purpose acquisition company (Spac), which also uses the Eco World brand name, eyeing overseas property markets.

Despite Eco World’s intention to be a 30% shareholder in the new venture, the Spac, should it come into being, may limit Eco World to the Malaysian market, a glass ceiling that no other property developer would have to deal with.

However that remains only a proposal at this point and the transformation of Eco World as a serious player in the market this year remains a wonder to behold.

More importantly, the promising prospects ahead from its enviable foundation — rapidly laid by masterful execution of the entire birth of Eco World, from the land accumulation as a private entity to the reverse takeover (RTO) of former Focal Aims to the assets injection exercise — marks it as one to keep an eye on next year too.

— By Khairie Hisyam

Other contenders:

UMW Oil & Gas doubles fleet

Despite listing just a little more than a year ago and having faced difficulties with listing on Bursa Malaysia, UMW Oil and Gas Corporation Bhd (UMW O&G), part of the UMW group of companies, has embarked upon an aggressive and ambitious plan to grow its fleet.

A homegrown company that provides offshore drilling, hydraulic workover, and threading, repair, and inspection services to the oil and gas sector, UMW O&G has taken up an expansion plan to increase the number of rigs in its fleet by one every year.

Having started with four rigs in its fleet when it surfaced on Bursa Malaysia last year, the company now has seven, having taken delivery of three rigs in the 2014 financial year itself, with Naga 5 in April, Naga 6 in September, and Naga 7 in December.

But what really draws KiniBiz to this particular oil and gas player is that, despite the aggressive expansion plan that has practically doubled its fleet size within a year, the company has its fleet fully utilised. This state of full utilisation will persist, at the very least, until the second quarter of 2015.

The order book, currently valued at RM2.1 billion, will be further boosted to record-breaking levels by the arrival of Naga 8 in September next year, for which the company is already in talks to secure a contract for the jack-up rig.

Seeing as the company has maintained its expansion plan of at least one rig a year, analysts have already forecasted that the company should be looking at taking delivery of another rig, Naga 9, in 2016.

At the same time, despite the recent decline in oil prices, analysts have continued to show confidence in UMW O&G, due to the fact that the fleet specialises in shallow water operations, which insulates the company, as the cost of field operations in the region it operates, the Southeast Asian shallows, is stable at US$50 (RM171.63) per barrel.

Recall the KiniBiz’s Yearenders series from last year, where UMW O&G was one of the oil and gas companies to look out for. With the expansion plan it has set and met, along with its being valued on par with large-cap players like SapuraKencana Petroleum Bhd, UMW O&G has certainly made its mark on the oil and gas industry.

— By Xavier Kong

Boustead bags RM9 bil job, tech transfer from global player

The Boustead group deserves a mention here, considering the RM9 billion contract the group managed to snag to design, construct, equip, install, commission, integrate, test, and deliver six Next Generation Patrol Vessels with Littoral Combat Ship capabilities for the Royal Malaysian Navy.

The contract, which was formally signed between Boustead Naval Shipyards Sdn Bhd – a subsidiary of Boustead – and the Malaysian government on the July 17, 2014, includes payment for a technology transfer from the designers of the vessel, which will be based on the Gowind-class corvette by French defence company DCNS.

That technology transfer would be a massive boost for Boustead’s prospects going forward. Recall that DCNS is a multi-national operation employing more than 13,000 workers across 10 countries. It is also the designer of Malaysia’s vaunted Scorpene-class submarines, of which Malaysia fields two in the Royal Malaysian Navy.

Boustead’s move in partnering with DCNS, as well as securing the transfer of technology, is in line with the government’s plan to broach the international defence market, as the production of the six patrol vessels is expected to feature more than 60% in local content.

The first of these six vessels is expected to be delivered in 2017, with the rest of the vessels being delivered every six months after the first delivery.

In any case, the technology and expertise gained from building these vessels would thus give Malaysia a leg up in reaching out to other countries that may be interested in bolstering their defences. And leading this charge overseas would Boustead.

— By Xavier Kong

SapuraKencana continues excellent run

KiniBiz’s company of the year 2013, SapuraKencana had another stellar this year.

The oil  & gas giant posted net profits of RM955 million in the first half of the 2015 financial year (1H15), an 89% increase year-on-year (y-o-y). Revenue also improved 24.9% over the same period, hitting RM5.1 billion in 1H15. Results in the second half (2H15) are expected to be solid as well.

SapuraKencana’s earnings were boosted by two major acquisitions — the inclusion of its US$2.8 billion (RM9 billion) purchase of Seadrill’s tender rig business in April last year, as well as the US$898 million acquisition of Newfield International’s oil & gas production blocks in Peninsula Malaysia, Sabah & Sarawak. It has since regrouped the Newfield assets under new subsidiary SapuraKencana Energy Inc.

Despite slumping crude oil prices in recent months hitting share prices of many oil & gas companies, including SapuraKencana, many analysts are still optimistic about SapuraKencana’s future based on its strong RM27 billion order book coupled with bids of RM30 billion’s worth of jobs across the region.

— By Khairul Khalid

Record-breaking Gamuda continues its streak

Another honourable mention for this category this year is Gamuda Bhd, considering the local construction and infrastructure company has been steadily breaking its earnings records for four years running, it is showing no sign of stopping.

The streak began in the group’s financial year, which ended on the July 31, 2011, with the group recording a record revenue of RM2.7 billion over the previous year’s RM2.5 billion, which was followed by RM3.1 billion in the following financial year of 2012.

Gamuda’s revenue numbers continued to grow to RM3.9 billion for the 2013 financial year, it then broke yet another record by reporting a revenue of RM4.6 billion in the 2014 financial year.

Currently, the group is at the centre of several projects, with a particularly notable one being its collaboration with MMC Corporation to construct the Klang Valley Mass Rapid Transit (KVMRT) rail network, a project which has helped the group’s earnings through the 2014 financial year, which is expected to continue to boost the group’s earnings through 2015.

The group is also currently sitting on an order book worth RM2 billion, which had depleted from RM3.5 billion in the first quarter of their 2014 financial year.  This was also a depletion from the group’s order book at the start of their 2013 financial year, which had been valued at RM4.5 billion.

However, the KVMRT project has been projected to aid the group’s order book by adding RM2.5 billion per annum for 2015 and 2016, which should sustain the group to the completion of the MRT track. Maybank Investment Bank is even more bullish with regards to the order book replenishment, noting that it could even be as high as RM3 billion per annum.

Overall 2014 had been quite a year for Gamuda, posting record-breaking numbers for the fourth year running while setting the stage for its orderbook to balloon going forward to boot.

— By Xavier Kong