NWP banks on construction business to turn around

PETALING JAYA: Timber and timber products firm NWP Holdings Bhd, which has been making losses since 2006, is banking on its construction business to turn around.
NWP was recently awarded a RM744 million turnkey construction project by M2B World (M) Sdn Bhd to construct a total of 3,855 houses for six projects under Syarikat Perumahan Negara Bhd (SPNB) and Perbadanan PR1MA Malaysia, with an expected net margin of 15%.
Speaking to reporters after the company’s EGM here yesterday, executive director Datuk Seri Kee Soon Ling said he is hoping the construction business will help increase the income stream.
“The construction business takes time, so we think we can turn around only next year,” he said.
While the balance sheet of M2B World has raised eyebrows, Kee stressed that it won’t have much impact on NWP. “We (deal) directly with SPNB and PR1MA, they will pay us and not through M2B, that’s why we don’t care about (M2B’s) balance sheet,” he explained.
Kee also said the company is expected to obtain a Grade G7 contractor licence from the Construction Industry Development Board in one to two weeks. The licence will enable NWP to tender for sizeable government and private projects.
For the nine months ended May 31, 2016, NWP registered a net loss of RM1.68 million versus a net profit of RM626,000 in the same period a year ago, due mainly to the depreciation of machinery and equipment.
“Actually the core business is still making money. However, I don’t think this core business can bring a lot of money,” Kee said.
He said NWP is looking to finalise the agreements in relation to two memorandums of understanding that it entered into in July.
One is for the appointment of NWP as main contractor by Listari Marina (MM2H) Sdn Bhd for the proposed development of 160 units of serviced suites in Pekan Klebang, Malacca. The other one is the partnership with China’s mechanical and engineering installation firm SCEGC Installation Group Co Ltd for construction projects in Malaysia.
Last week, NWP was slapped with an unusual market activity query following a sharp fall in its share price and high trading volume.
The company did mention that it is currently in discussions to purchase a stake in a company which will be in the service industry.
“It’s more an investment for us as we’re not looking to acquire a majority stake. It’s not quite related to our current business. We can’t tell much now,” Kee said, in reference to the discussions.
At yesterday’s EGM, NWP received shareholders’ approval for the proposed establishment of a share issuance scheme of up to 15% of the company’s issued and paid-up share capital and proposed increase in share capital from RM100 million to RM500 million. Proceeds raised will be used to fund the construction projects and for working capital.