Construction outfit Bina Puri Holdings Bhd is planning to further diversify the company’s sources of income by acquiring a hydro-power plant in Pulau Bangka, Indonesia, and entering the mining business.
The company’s group managing director, Tan Sri Tee Hock Seng, said the decision was made to diversify the sources of income further as the core construction business suffered from extremely low profit margins.
He said although construction had been the bread and butter of Bina Puri, narrowing margins was now pressuring the company to venture into other new businesses.
“Not only are we faced with escalating building material prices, the whole industry is also faced with labour shortages. The high rubber prices had spurred a lot of Indonesians to opt out of seeking opportunities in Malaysia,” Tee told StarBiz.
He said the company would be venturing into the mining business as well as acquiring a hydro-power plant. Bina Puri currently has five diesel power plants in Pulau Bangka with a combined capacity of 10 megawatt.
The company took control of the power plants in 2010 by acquiring an 80 percent stake in Indonesia-based power plant owner and operator PT Megapower Makmur via Bina Puri Power Sdn Bhd, and had spent close to $5mil on the investment.
“We are in talks with parties to acquire a hydro-power plant with substantial capacity, and we are moving on to a more concrete stage already,” Tee said, adding that the hydro-power plant would complement the existing plants.
According to him, the margins generated by the power plants had been very healthy and were generating about 40 percent of revenue as gross profits.
The power plants have a concession of about five years with PT PLN (Persero) the Indonesian equivalent of Tenaga Nasional Bhd.
Tee said the company was now in preliminary discussions with an Indonesian partner to form a joint venture to mine coal in Kalimantan, Indonesia.
“We will be engaging Chinese mining contractors for the project as they are well known for their mining expertise. I like to do mining, and it has been my forte over the last 30 years. I need to help steer Bina Puri to have more recurring income and new businesses,” he said.
Tee started mining tin in the 1970s in various parts of Selangor including Bangi, Port Dickson, Dengkil, and Batang Kali. He also privately owns manganese mining operations in Kelantan.
Besides power generation and mining, he said the company was also focusing on property development as margins were significantly better compared with construction.
The company posted a net profit of RM6.01mil or less than 2 percent of the RM1.17bil revenue.
Currently the company has about eight projects in the pipeline worth a total of RM1.5bil in gross development value located in the Klang Valley, Johor Baru and Kota Kinabalu.
As at end-December last year, the company still had 67 percent balance of works to be executed from the RM4.86bil worth of ongoing projects.