AZRB to clinch more jobs, boosts orderbook

KUCHING: Construction player Ahmad Zaki Resources Bhd (AZRB) is expected to clinch more jobs, thus boosting its outstanding orderbook to RM3.8 billion.

Alliance Research Sdn Bhd (Alliance Research) in a report said potential jobs win for AZRB could be the construction of Langat Two water treatment plant and the redevelopment of media centre in Angkasapuri, Kuala Lumpur.

Recently, AZRB announced that it secured a RM163 million contract to build the new Air Police Base in Jalan Lapangan Terbang Subang, Shah Alam.

Alliance Research analyst Jeremy Goh said, “With the recent award, AZRB’s year-to-date job wins stand at RM1.89 billion against our full year assumption of RM1.8 billion.

“We estimate AZRB’s orderbook balance to stand at RM3.76 billion, implying a very strong orderbook to construction revenue ratio of 6.3 times,” he said.

Goh added that the new Air Police Base contract secured by AZRB has proven its ability of securing government related contracts.

“We estimate that total contract wins from the government, its related entities and government-linked companies (GLC) to make up 89.4 per cent of AZRB’s total job wins of RM6.5 billion since 2005.

“While the slowing of government related projects is a concern given the fiscal tightening, we expect this to mostly impact mega projects.

“Middle to small scale projects, for instance below the RM300 million range in which AZRB focuses on should be less impactfed,” Goh noted.

He said the likely contracts for AZRB in the pipeline will include the Langat Two water treatment plant where Salcon-MMC Corporation-AZRB joint venture is understood to have submitted a RM1 billion bid.

Alliance Research said AZRB’s 30 per cent stake in the joint venture will enable the construction company to land itself with RM300 million of works if the bid is successful, adding that the outcome is expected to be known in the first quarter of 2014 when the Selangor water consolidation exercise is expected to be resolved.

The research firm observed that AZRB is also bidding for the redevelopment of Angkasapuri, noting that the concessionaire for the project has been selected and it has called for tenders.

Upon a company’s visit by Alliance Research, the research firm noted that the package of the contract in which the company bid for was worth around RM300 million to RM400 million.

In addition, Alliance Research believed that AZRB also stood a very high chance of benefiting from the Bumiputra Economic Empowerment plan unveiled last month by Prime Minister Datuk Seri Najib Tun Razak whereby the plan involved carving out projects specifically for qualified Bumiputra contractors.

The research firm understood that some 30 per cent to 40 per cent of those projects will be solely allocated for Bumiputra participation.

On another note, Alliance Research maintained its positive outlook for AZRB while assuming some RM400 million of new jobs wins for the construction player for financial year 2014 to 2015 despite the amount being lower than the RM1.89 billion secured this year.

This is due to one of the sizable contracts it won this year, which is the RM1.55 billion construction of East Klang Valley Expressway.

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