Revenue Grows 34.4% to HK$1,285.6 Million with Pro Forma Net Profit* increasing by 8.3% to HK$130.6 million;
Continues to Secure New Scalable Contracts and Is Well-positioned to Capture Numerous;
Business Opportunities Arising from “One Belt One Road” Initiative
HONG KONG — BGMC International Limited “BGMC” or the “Group”) (HKEX: 1693), a Malaysia-based construction services company, has announced its first audited annual results for the year ended 30 September 2017 (“FY2017” or the “Year “) since its successful listing on the Main Board of the Stock Exchange of Hong Kong Limited (“HKSE”) on 9 August 2017.
– Revenue increased by 34.4% to RM694.9 million (approximately HK$1,285.6 million) as compared with RM516.9 million in FY2016
– Gross profit rose 22.8% from RM104.3 million in FY2016 to RM128.1 million (approximately HK$237.0 million) in FY2017, with gross profit margin remaining healthy at 18.4%
– Net profit was RM54.8 million (approximately HK$101.4 million), with pro forma net profit* increased by 8.3% to RM70.6 million (approximately HK$130.6 million)
– The Board has resolved to declare a final dividend of HK1.5 cents per share for the first financial year following the Group’s listing
* Pro forma net profit are derived by excluding non-recurring listing expenses for FY2016 and FY2017 respectively
During the Year, the Group recorded total revenue of RM694.9 million (approximately HK$1,285.6 million), a year-on-year increase of 34.4% (FY2016: RM516.9 million). Gross profit rose 22.8% to RM128.1 million (approximately HK$237.0 million). Net profit for the year was RM54.8 million (approximately HK$101.4 million). If excluding listing expenses incurred in FY2016 and FY2017, pro forma net profit of the Group rose 8.3% to RM70.6 million (approximately HK$130.6 million). The Board has resolved to declare a final dividend of HK1.5 cents per share for the first financial year following the Group’s listing.
Tan Sri Barry Goh, Chairman and Executive Director of BGMC, said, “The year 2017 was an eventful year for BGMC as we became the first Malaysian construction company to list on the Stock Exchange of Hong Kong Limited. During the past financial year, we made excellent progress on all fronts of our business and witnessed satisfactory growth in our revenue and orders. We participated in tenders for larger scale projects during the Year and took important steps to diversify our customer base and revenue streams by securing new projects from established property developers as well as government-linked companies. The listing of BGMC also strengthened our financial capability to undertake bigger Public-Private-Partnerships projects. Our achievements during the Year reflected the disciplined execution of our strategy, resilience and strong business fundamentals of BGMC positioning us for more robust growth in the years to come.”
Driven by the organic growth of the Group’s various business segments, namely Building and Structures, Energy Transmission and Distribution as well as Mechanical and Electrical, the construction services business continued to be BGMC’s main revenue contributor, contributing RM684.1 million (approximately HK$1,265.6 million) to the Group’s revenue during the Year, up 34.6% as compared to the previous year and accounting for 98.4% of its total revenue.
During FY2017, the Group secured 23 new projects with a total contract value of RM792.6 million (approximately HK$1,466.3 million), including the construction of Spice Hotel in Penang and Setia Sky Seputeh in Kuala Lumpur. As at 30 September 2017, the Group’s order book for Construction Services stood at RM2.2 billion (approximately HK$4.1 billion) while its balance order book stood at RM1.2 billion (approximately HK$2.2 billion).
The Group’s ability to deliver value engineering services and innovative end-to-end integrated solutions, coupled with strong execution and effective cost control capabilities has given it the advantage to successfully complete several key projects during the Year. The revenue from the Mechanical & Electrical segment increased twofold from RM18.5 million in FY2016 to RM37.5 million (approximately HK$69.4 million) in FY2017 due to significant progress in construction of the Melawati and Sendayan projects. BGMC’s newly secured project, “The Henge Metropolitan” in Kepong also contributed to the higher revenue recognised in FY2017. In addition, the Energy Transmission and Distribution segment also saw a substantial jump of 141.9% from RM23.3 million in revenue during FY2016 to RM56.2 million (approximately HK$104.0 million) in FY2017 following its success in securing new projects such as power substation works at PMU 132KV Damansara Heights and underground cabling works from PMU Tanjung Kupang to SSU Forest City, from PMU Damansara City to PMU Brickfield.
Revenue in the Building and Structures segment increased 42.8% from RM371.3 million for FY2016 to RM530.0 million (approximately HK$980.5 million) for FY 2017 following the increase in construction progress for the Group’s ongoing projects such as D’Pristine Medini, V-Residency 2 and The Serini projects. The refurbishment works of Bukit Jalil National Sports Complex into the Kuala Lumpur Sports City also contributed RM44.1 million (approximately HK$81.6 million) in revenue during the Year. On the other hand, the Earthworks and Infrastructure segment won three new contracts during the Year, including Kota Seriemas PT20, Bukit Rahman Putra Sungai Buloh and Pengerang which altogether worth RM7.9 million (approximately HK$14.6 million).
Public Private Partnerships (PPP) Projects Based on BLMT Model
The Concessions and Maintenance segment contributed RM10.5 million (approximately HK$19.4 million) to the Group’s overall revenue and imputed interest income amounted to RM43.7 million (approximately HK$80.8 million) in FY2017. To date, BGMC has in place the Universiti Teknologi MARA (UiTM)’s Build, Lease, Maintain, Transfer (BLMT) project which operates based on a concession granted over a period of 23 years, of which three years are for construction while the remaining 20 years are for asset management services. The PPP project ensures long-term, steady cash inflow for the Group. On 12 December 2017, BGMC received a letter of bid acceptance from the Energy Commission (EC) of Malaysia for the concession project in relation to the construction and development of a large scale 30 megawatt AC Solar PV Plant (the “PV Plant”) at Kuala Muda, Kedah, Malaysia. BGMC won the contract in a competitive bid process conducted by the EC of Malaysia. Securing this bid once again demonstrates the capability of BGMC in winning large scale PPP projects from Malaysia’s government bodies.
The Malaysian construction industry is expected to enjoy a CAGR of 4.8% on the back of an industry growth of 10.3% per annum in the next five years due to the increase in the number of projects awarded following the introduction of the Construction Industry Transformation Programme (2016-2020) and the 11th Malaysian Plan. In addition, the number of PPP projects in transportation, road, communications, healthcare, energy and education sectors of the Malaysian government alone is also expected to increase and drive both the construction and BLMT project businesses for BGMC.
To capture the numerous business opportunities arising from Malaysia and adjacent countries, BGMC will continue to invest in initiatives that will give it a solid competitive advantage over the long term and optimise its productivity to achieve a robust order book in the foreseeable future. It’ll continue tendering for projects in the corporate sector, property (residential and commercial), industrial sector, government-linked projects and supporting infrastructure projects in Malaysia as well as seize opportunities available elsewhere in the ASEAN region. At the same time, the Group will be seeking possible opportunities via strategic partnerships to extend its construction services portfolio and footprint across the region, thereby increasing its market share in the near future.
For the concession projects, on the other hand, BGMC is working from a position of strength to capture the PPP projects under the Private Finance Initiative (PFI) programme which will widen its customer base and at the same time, strengthen its reputation in the construction landscape of both Malaysia and the region. Coupled with the One Belt One Road Initiative which the Group believes will attract foreign direct investment, BGMC will accelerate growth by creating strong partnerships and collaboration with business partners who have local in-depth knowledge and strong connections for PPP tenders or proposals from governments across the region. Riding on the successful listing in Hong Kong and the city’s position as the fundraising centre for the One Belt One Road Initiative, BGMC is well-positioned to grow its construction footprint regionally.
Tan Sri Barry Goh concluded, “Our established reputation, extensive experience and ability to deliver integrated construction solutions have enabled us to sustain our competitive advantage. We also have continued to see many growth opportunities in the PPP sector, both locally and regionally. We believe that we are well-positioned to leverage Hong Kong’s role as the fundraising centre for Asian infrastructure projects, especially those under China’s One Belt One Road initiative. This enables us to unlock new opportunities as we widen our market share both locally and abroad, harnessing the value of regional partnerships and collaboration in Malaysia, China and across the rest of the Southeast Asia. Thus we are confident and committed to delivering sustainable favorable returns to our shareholders in the long run.”