KUCHING: GFM Services Bhd (GFM) – which is en route to a listing on the ACE Market of Bursa Malaysia on January 9 following a reverse take over (RTO) of the listing status of AsiaEP Resources Bhd – is poised to benefit from the growing trends of outsourcing services.
The company which provides facilities management (FM) services, such as mechanical and electrical (M&E) systems services, civil and structural services, cleaning, landscaping, pest control and other general services will gain from increasing number of contracts in the future.
The research arm of Public Investment Bank Bhd (PublicInvest Research) in a report yesterday said GFM aims is to provide non-core services to organisations to enable them to focus on their core activities and is able to service asset categories through a variety of functions offered.
It observed that GFM currently provides integrated FM services to the UiTM campuses in Tapah (Perak) and Mukah (Sarawak) as well as the Lembaga Kemajuan Ikan Malaysia (LKIM) Fishery Port in Kuching.
Besides that, the research firm noted the firms is also actively participatiing in government initiatives, in line with the latter’s aspiration to increase private sector participation in managing the government’s non-core assets and businesses.
It added GFM, having successfully participated in five of the government’s last 28 Public-Private Partnership (PPP) initiatives on record bode well for the track record of the group.
In the meantime, the research firm noted consultancy services were being provided for the development of the UiTM campuses in Pasir Gudng (Johor) and Dengkil (Selangor), with the potential of turning into integrated FM service contracts.
In particular, PublicInvest Research noted the recent securing of a three-year contract (2016 to 2018) to manage workers’ camps in Pengerang, Johor was a first for the group in terms of work scope.
PublicInvest Research opined that GFM’s relative success to-date has inadvertently opened up a new income stream, for instance workers camp management, opportunities of which are aplenty considering the host of major infrastructure works nationwide in the coming few years.
Apart from that, the research firm noted the group will leverage on the use of information technology (IT) to enchance service offerings and customer relationships, with recent investment into the SAP system to better manage costs and efficiency.
Moreover, It opined that GFM has the potential to grow through merger and acquisition (M&A) joint ventures and collaborations, to expand service offerings and facilitate expansion into new markets.
Meanwhile, PublicInvest Research noted the integrated FM market in Malaysia has grown at a compounded annual growth rate (CAGR) of 8.28 per cent from about RM2.99 billion in 2011 to RM4.11 billion in 2015.
The research firm noted the FM market’s CAGR growth is poised to gradually increase to 8.58 per cent from 2015 to 2020, supported by the implementation of large-scale projects and construction industry growth domestically, as well as a renewed focus to improve the life cycle costs of all projects as well as ensuring a clean, safe and healthy environment for the residents of a facility.
On another note, PublicInvest Reseach observed that GFM Group’s revenue was derived from project-based sales which typically last between three to five years.
The group’s current order book stood and RM374 million and has secured the company’s income until 2034 though only from one particular contract, which will be relatively minimal on an annual basis.
In a typical project, GFM is contracted by the customer to perform their FM function in which GFM acts as a central coordinator and is responsible for the planning, execution, control and monitoring of these activities.
While GFM has its own in-house expertise to provide M&E services, other functions are outsourced to the company’s subcontractors who are mostly specialised service providers, which essentially tasks GFM as one who plans, designs and ensures the smooth operation.
On top of that, GFM is able to undertake activities in all three segments (hard, soft, advisory) either through its own in-house expertise or through the management of third-party subcontractors.
The research firm believed the company stood in better stead, making it one of the only few in a diverse market space able to undertake services for a wide clientele base which in turn has also reduced its exposure risks and over-reliance on just a particular business segment.
Thus, with opportunities to provide more FM services contributed by the non-residential subsector (on-going construction of commercial buildings) and the residential sector (on-going government initiatives to provide affordable housing), PublicInvest Research was bullish on the growth of GFM.
The research firm opined that the group has the ability to further replenish its order book with the vast potential in a growing FM services market.
It noted GFM has a current market share of 6.3 per cent in the integrated FM education segment and a 3.7 per cent market share in the government offices and premises segment.