Jaks Resources’ USJ 1 project on hold

SUBANG JAYA: Jaks Resources Bhd, which expects higher earnings for 2015, has put on hold its plan for a mix development project in USJ 1, Subang Jaya with the softening in the property market.
However, CEO Ang Lam Poah believes that the property segment will still be the largest earnings contributor for the company in 2015.
Coupled with a stable income stream from the construction segment, which has an order book of RM1.3 billion at present, he expects Jaks' net earnings for 2015 to be higher versus 2014's RM14.02 million.
Sitting on a 15-acre landbank, the USJ 1 project was scheduled to be launched in the second half this year, with an estimated gross development value (GDV) of RM1.4 billion.
"Now, we hold the USJ 1 (project) first because of the current situation, a bit of a slowdown especially after GST (implementation), so we'll launch it when the time is right," Ang told a press conference after the company's AGM here yesterday.
Jaks' group senior general manager of finance Chee Seong Heng, meanwhile, expects the USJ 1 project to be launched early next year.
The unbilled sales for the property development division stands at RM400 million, from Pacific Star project in Section 13, Petaling Jaya as well as Pacific Place project in Ara Damansara, with a GDV of RM1.2 billion each.
Pacific Star consists of two commercial blocks – of which one block is for Star Publications (Malaysia) Bhd for the settlement of the land purchased, as well as three service apartment blocks, with a take-up rate of 70%.
On the construction side, Ang said Jaks is tendering for jobs worth RM2 billion and is hopeful of a success rate of 60% to 70% based on the past track record.
The company has an order book of RM1.3 billion currently – made up of water and sewerage infrastructure-related projects and construction of properties, which will keep it busy for another three to four years.
Ang added that building material costs are still manageable despite a weaker ringgit, which increases import costs.
On a separate note, he said Jaks is in final stage talks for its joint venture in Vietnam for the Hai Duong power plant project.
"We've two more (potential partners) to finalise, we should be making an announcement by next month should we are able to wrap up (the deal)," he noted.
The search for new potential partners comes after Jaks' proposed joint venture with Wuhan Kaidi Electric Power Engineering Co Ltd lapsed in April last year.
The Ministry of Industry and Trade of the Socialist Republic of Vietnam had on May 22, 2015 approved Jaks' request to extend the date for the completion of the preconditions of the project.
The build-operate-transfer power plant, which will take 36 months for construction, will provide recurring income to Jaks as it comes with a 25-year power purchasing agreement with the Vietnam Electricity.