Zelan ... On Its Route For Recovery & Growth !!

The group, which has faced some challenges in the past relating to its projects, has just completed a couple of major corporate exercises that helped remove its accumulated losses.

It is banking on growth in the construction sector - Zelan’s mainstay - to remain “strong” as Malaysia continues to be on a growth trajectory, suggesting a strong construction job flow domestically.

Zelan currently (Aug 2014) has an orderbook of about RM1.15bil. This will last us until the first half of 2017.

The company is 39.25% controlled by conglomerate MMC Corp Bhd.

Of the current (Aug 2014) projects on the plate, three are local, one of which is ongoing, with the other two about to commence soon.

Another two jobs were just obtained in Aug 2014, of which the first is a contract from the East Coast Economic Region Development Council for the construction of a RM248.73mil drawbridge connecting Muara North and Muara South in the Kuala Terengganu city centre.

Additionally, Zelan is also one of the companies that was recently awarded a contract involving Petroliam Nasional Bhd’s Pengerang Integrated Complex (PIC). Under this, its job involves the basic design, detail engineering, procurement, construction and commissioning of the material off-loading facilities jetty at Tanjung Setapa, Johor.

Zelan’s current (Aug 2014) overseas focus is a mixed development project in Abu Dhabi. Notably, this is not a new contract as it was supposed to be completed some time back.

In April 2014, the company reached an amicable settlement with Meena Holdings LLC, which is the owner of the Meena Plaza Mixed Use development project that Zelan was supposed to complete but didn’t due to certain disputes.

It was agreed that Zelan would continue work on the development project, slated to start Sept 20124 in addition to being paid some RM107.4mil as part of the agreement. The balance of its work on the Abu Dhabi project is worth some RM464mil and is expected to be completed within 15 months.

This “will certainly put Zelan on a firmer footing on its route of recovery and growth”.

Zelan made a net profit of RM35.2mil or 5.77 sen per share in FY14. compared with a net loss of RM77.8mil for the same period a year earlier.

The company raised a total of RM327mil after selling its shares in IJM Corp Bhd in its concluded financial year ended March 31 (FY14).

Of the amount generated, Zelan has used some RM268mil to pay off its term loans while the remaining was used to help partially settle a loan as a result of the wrongful liquidation of the performance bond for the Meena Plaza project by Meena Holdings, according to its latest annual report.

Zelan also had a rights issue exercise which raised RM42.2mil.

Zelan just completed the corporate exercises that have resulted in the elimination of accumulated losses and now (Aug 2014) it has a small amount of retained earnings at company level.

As for dividends to shareholders, the company has to first build up its retained earnings.

Zelan’s plate is a plan to “reactivate” its property and development unit without losing focus on its immediate goal of re-strengthening its engineering and construction segment. This unit generated sales of RM800,000 in FY14, a small amount compared with the group’s total revenue of over RM250mil. With the improved financial position of Zelan, it intends to explore opportunities in this segment.

Among Zelan’s completed work is RM179.3mil worth of jobs involving berth and back of wharf construction at Pelabuhan Tanjung Pelepas in Johor, a port controlled by MMC.

It is currently (Aug 2014) working on a RM391.6mil job involving the construction of the Centre for Foundation Studies (Phase 3) at the International Islamic University Malaysia in Gambang, Pahang which should be completed by January 2016 on top of two subcontract packages at Tanjung Bin’s coal fired power plant in Johor.

The other two projects that the company should soon start work on are the Gombak Integrated Transport Terminal, Selangor and the construction of the Integrated Immigration, Custom, Quarantine and Security Complex in Kedah.