Kejuruteraan Asastera sees potential in mechanical sector business growth

KUALA LUMPUR: The newly Ace Market-listed Kejuruteraan Asastera Bhd (KAB) intends to grow its mechanical engineering (M&E) business to account for 50% of the group’s total revenue contribution in the next five years, from less than 10% currently.
KAB’s current core business, the electrical engineering services, which contributes almost 90% of its total revenue, involves the installation, testing and commissioning of electrical systems. Its M&E services include the installation, testing and commissioning of air-conditioning and mechanical ventilation systems.
KAB, which was the most active stock, closed at a premium of 20%, or 5 sen, over its issue price of 25 sen in its debut on the Ace Market of Bursa Malaysia last Friday.
Its shares opened at 33 sen, hit a low of 28 sen and high of 33 sen before ending its maiden day at 30 sen, with 159.92 million shares traded.
Speaking at a press conference after the group’s listing ceremony, its managing director Datuk Lai Keng Onn said going forward the company aims to expand and strengthen its M&E services capabilities, driven by positive outlook for the construction sector and by undertaking more affordable housing projects.
“Actually, the M&E contract value for affordable housing projects is higher. So we are aggressively tendering for it. That’s why if the market has a lot of affordable housing projects, it is an advantage for us. We also can see that currently there is huge potential for us to grow in the mechanical sector,” he said.
Lai said the group is also targeting to expand its geographical presence in Kuala Lumpur, Johor as well as Penang, noting it is in the process of finalising one or two affordable housing scheme projects in Johor.
Lai expects KAB’s current order book of RM210 million will keep the group busy until 2019, and is expected to hit RM250 million by year-end. The company is now awaiting the outcome of its bids worth RM250 million for contracts that include affordable housing and mixed-development projects.

Lai said the group is also keen to participate in tendering for infrastructure projects in the future, including the Mass Rapid Transit project.
For the third quarter ended Sept 30, 2017, KAB posted a net profit of RM2.12 million, on the back of RM30.18 million revenue. For the nine months period, it registered a net profit of RM5.35 million, with a revenue of RM83.23 million.
The group raised RM20 million from its initial public offering (IPO), which comprises a public issuance of 80 million new shares and offer for sale of up to 32 million existing shares. Of the proceeds raised, 58% will be used for working capital, 12.5% for capital expenditure, 9.1% for repayment of bank borrowings and 17% for listing expenses. About 3.4% will be used to set up a proposed new branch office in Johor Baru and an additional office in Kuala Lumpur.
Its public offer of RM16 million issue shares was oversubscribed by 57.33 times.