Prospectus launch: (From left) Vestland director Ong Wei Liam @ Jeremy Ong, director Datuk Yong Lei Choo, executive director Wong Sai Kit, group managing director Datuk Liew Foo Heen, AmInvestment Bank Bhd CEO Tracy Chen Wee Keng, Vestland chairman Datuk Mathialakan Chelliah, director Wee Chuen Lii and AmBank (M) Bhd commercial banking executive vice-president Yeow Swee Yun at the launching ceremony.
KUALA LUMPUR: Construction services group Vestland Bhd
believes 2023 will be another positive year, on the back of a strong outstanding order book of RM947mil and existing tender book value of RM2bil.
The company is slated to be listed on the ACE Market of Bursa Malaysia on Jan 31 next year.
Speaking at the prospectus launch of its initial public offering (IPO), group managing director Datuk Liew Foo Heen said Vestland expects to progressively recognise its order book over the next four financial years, while also looking to improve its profit margins despite not revealing specific targets.
At present, the group has garnered a net profit of RM11.6mil for the six months ended June 30, on a margin of 8.3%.
Liew said Vestland is aiming to raise approximately RM56.1mil from its IPO exercise, of which 59.7% would be utilised as working capital.
About one-fifth will be used as performance bonds or cash deposits for construction projects
Meanwhile, 13.4% will be used for the acquisition of a new head office in Shah Alam, which is expected to commence operations in the first quarter of 2023; as well as for repayment of borrowings.
The prospectus launch is in conjunction with Vestland’s IPO of 240.8 million ordinary shares at the price of 33 sen per share.
The exercise comprises a public issue of 170 million new shares and an offer for sale of 70.8 million existing shares, aggregating to a total of 240.8 million ordinary shares.
Upon Vestland’s listing, its market capitalisation is estimated to be RM311.6mil.
Besides looking to expand its current order book, Vestland said it is also targeting to strengthen its design-and-build (D&B) segment, which itself comprises eight ongoing projects valued at RM653.6mil, as well as bolstering its civil engineering capabilities.
On how the company intends to weather the labour shortage issue plaguing the construction sector, Liew said: “We managed to transform ourselves from a conventional builder to a D&B contractor, a strategy that began in 2020.
“This gave us more say as to the construction method and design engineering of the building work.
“The technology transformation from timber formwork to aluminium system formwork has also been used to overcome worker shortage, as there is no lack in formwork workers.”
Additionally, he pointed out that Vestland is awaiting the arrival of a new batch of foreign workers and projected that the employee shortage situation would continue to ease as 2023 progresses.
“Along the way, we are always looking for ways to expand on our current 210-strong workforce and to remunerate them well.
“However, while we believe the size of the projects to come would be larger, it does not necessarily mean we need to hire more workers. We will gradually increase our workforce capacity when the need arises,” Liew said.
On a separate note, he revealed that Vestland is anticipating to complete a number of projects in the coming months including the Residensi Armani Petaling in Cheras, Armani Subang SOHO in Subang Jaya and Residensi Armani Bukit Lanjan.
He said the company is also looking to finalise the securing of new projects in the coming months within the Klang Valley.
With government projects making up about one-third of its order book, Liew continues to foresee more government jobs in Vestland’s pipeline, noting that the group looks forward to welcoming more projects from the new administration headed by Prime Minister Datuk Seri Anwar Ibrahim.
Commenting on the current glut of residential properties in the market, he highlighted that Vestland maintains its view that demand for residential properties will continue to stay solid in 2023, adding that the overhang is caused by a “mismatch” of the products.
Liew added that the take-up rate for Vestland’s projects is usually at 100%, including the ongoing ones.
“Our current strategy, which we will continue to use moving forward, is to perform feasibility studies before we embark on any new projects to ascertain if the products would be marketable. Otherwise, we would not take them up,” he said.
Liew concluded that the group would be looking to tap on its D&B and civil engineering services business segments as part of its ongoing strategy to address opportunities in both the residential and non-residential sectors, through marketing its D&B as well as civil engineering capabilities to prospective clients.
“We will leverage on our business relationships with our existing customers and completed civil engineering works as a platform and reference to pursue further opportunities in these areas,” he said.
