Crest Builder to focus on property development

Construction firm Crest Builder Holdings Bhd, which has an orderbook of RM350mil, will focus on property development to make better profits.

Executive director Eric Yong said the company’s property division, which contributes 70% to earnings, would take the lead despite the soft property market.

He said its RM198mil Anggun serviced apartment contract in Jalan Sultan Ismail that was secured from Uda Holdings Bhd in March this year would only allow its orderbook to stretch up till 2017.

“Which is why we are still on the lookout to replenish our orderbook in order to sustain the construction division.

“But as a whole, we are comfortable with the contribution from the property arm because our in-house construction unit is still very busy,” he said after the company’s AGM yesterday.

Crest Builder expects the revenue ratio for the construction and property segments to be 50:50 this year.

At present, the construction segment contributes 60% to revenue while 40% is from the property arm.

Yong remains confident that the company would do better this year and see an improvement in its bottom line, driven by sales from its Alam Sanjung property project in Shah Alam that has a gross development value (GDV) of RM300mil. The project is almost 70% sold out.

The decrease in the company’s financial performance for 2014 was largely due to the one-off cost that was incurred for its UiTM project in Tapah, Perak.

“We had to refinance this project by issuing bonds (sukuk murabahah) worth RM510mil in December 2014,” he said, adding that the move would inevitably save financing costs in the long term.

While looking for smaller land parcels for property projects, Yong said the company was also exploring Penang and Sabah to develop properties there.

But the Klang Valley would still be the company’s focus since the market is still attractive, he said.

He is confident that the construction sector is still bright, driven by infrastructure projects under the 11th Malaysia Plan (11MP).

“We are eyeing some of the projects rolled out under the 11MP but the concern is how soon will these be tendered out,” he said.

Crest Builder’s projects in the pipeline have a GDV of RM4.5bil and its recurring income comes from the rental of office towers and car parks at 3 Two Square in Section 19, Petaling Jaya, and Tierra Crest in Kelana Jaya, both of which bring in RM18mil a year. - By The Star