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Thursday, November 14, 2013

Ekovest shareholders approve DUKE Phase-2

Posted on 14 November 2013 - 05:37am
Liew Jia Teng

KUALA LUMPUR (Nov 14, 2013): Builder Ekovest Bhd, controlled by property tycoon Tan Sri Lim Kang Hoo, has submitted proposals to the government for two highway extension projects in the southern Kuala Lumpur region worth about RM2 billion.

"We've submitted the proposals and are waiting for the government's response. Hopefully, we'll hear from them within six months," said Ekovest managing director Lim Keng Cheng (pix), who is the nephew of Kang Hoo.

"We're quite positive (of clinching) at least one more (highway extension project), but there's a lot of competition. Many other proposals would have been submitted (by Ekovest competitors) too," he told a press briefing after the group's EGM here yesterday.

At the meeting, Ekovest shareholders approved the proposed extension of the Duta-Ulu Kelang Expressway (DUKE Phase-2) costing RM1.18 billion, which comprises two additional links, namely, the 7km Sri Damansara link and the 9km Tun Razak link.

Ekovest, which is the master contractor for DUKE Phase-2, is expecting a profit margin of some 15% from the project.

"We'll supervise the project ourselves and we want to make sure there'll be no delay. We know we will own the highway for the next 50 years, so we want to make sure the building materials that we use are long-lasting," said Keng Cheng.

DUKE Phase-2 involves the construction of an elevated highway that will complement the existing DUKE. The extension starts from the Menjalara interchange at Bandar Menjalara and ends at the Segambut interchange for the Sri Damansara link and from Jalan Tun Razak and ends at Jalan Gombak for the Tun Razak link in Kuala Lumpur.

Ekovest has a 70% stake in DUKE through Konsortium Lebuhraya Utara-Timur (KL) Sdn Bhd. It is a 54-year concession ending in 2059.

"We'll expand the (DUKE) concession. We're definitely not stopping at (the construction of) DUKE Phase-2," said Keng Cheng.

He added that the existing DUKE is alleviating traffic congestion in the northern part of Kuala Lumpur, and this will be extended down south.

Keng Cheng said construction of DUKE Phase-2 will begin at the end of 2013, and will last three years. "All preliminary works have been done. The actual physical work will start within two weeks."

On another issue, Keng Cheng doesn't see the forthcoming implementation of the goods and services tax (GST) having a major impact on Ekovest.

"Toll revenue from the highway is tax exempted. Besides, we can easily lock in the price of building materials," he said.

For the financial year ended June 30, 2013 (FY13), Ekovest's construction business contributed 86% of the group's revenue, with the concession business making up the rest.

Going forward, Ekovest is diversifying into property business, as well as growing its concession business.

"The ideal ratio that we aim to achieve in two years is 30% from the construction business, another 30% from the concession business, and the remaining 40% from the property business," said Keng Cheng.

By 2020, Ekovest targets to launch property projects with a combined gross development value (GDV) of RM6 billion in Kuala Lumpur.

The group currently has a construction order book of RM2.24 billion.

Meanwhile, Keng Cheng stays mum on news reports that Iskandar Waterfront Holdings Sdn Bhd (IWH) would delay its initial public offering of up to US$300 million.

"I have no comment. All I can say is, I'm one of the directors in IWH, and I own a small portion of shares in the company," he said.

It was reported that IWH, which is 60% indirectly owned by Kang Hoo, has postponed its IPO to the fourth quarter of 2014, a year later than initially planned, on concerns that government measures to rein in property prices would slow demand from foreigners.

On that, Keng Cheng, said to put IWH's IPO in the same context with the curbing measures is "not a fair statement" and "not true".

He said the impact of the revised real property gains tax (RPGT) is immaterial.

"The whole world is doing that. When the property market is too hot, the government will try to do something. I always tell my home buyers, it's just a psychological impact. After a while, the fear will disappear," said Keng Cheng.

For the genuine home buyers, he said, as long as the price is right and the location is good, it can never go wrong and they should not be worry about the RPGT.

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