KUALA LUMPUR: Construction player Aneka Jaringan Holdings Bhd (AJHB) will focus on growing the capacity of its Indonesian subsidiary PT Aneka Jaringan Indonesia (PTAJI) and also push its renewable energy venture in the country as a new source of revenue.
Managing director Pang Tse Fui said the company has ventured into Indonesia's renewable energy market through PT Sam Anergi Indonesia, a joint venture (JV) between AJHB and Samaiden Group Bhd (SGB).
To recap, in August 2022, AJHB and SGB signed a JV agreement to tap and secure engineering, procurement, construction and commissioning (EPCC) of solar photovoltaic (PV) systems and power plants in Indonesia.
According to the Bursa Malaysia filing, the JV provides SGB access to the Indonesian market and allows AJHB, through PTAJI, to add to its value chain in a fast-growing segment.
Pang said apart from the renewable energy business segment, AJHB focuses on growing PTAJI's capacity by increasing its machinery count.
"We specialise in bored piling and diaphragm wall construction for buildings and infrastructure.
"We dispose of old, worn-out machinery and replace them with current models where needed.
"These decisions will always be based on if we can achieve efficiency in productivity, cost savings and environmental sustainability," he told The New Straits Times.
Apart from construction and renewable energy, Pang said there are no plans to venture into other businesses or new construction services or products. This is to ensure that management does not overstretch itself.
"We have been seeing a lot of requests for tenders, but we are currently running at full capacity, and we are very selective on projects to tender and accept to ensure that our returns and margins are protected.
"Overall, we are optimistic about the earnings outlook for FY23 as our order book should last us approximately 10 months. Our replenishment target for our order book is RM170 million per annum," he said.
When asked, Pang said a key challenge in the industry is material price volatility, as China's economy reopening has created short-term price volatility in Asia.
"Our upcoming contracts have factored in this price volatility, and we anticipate prices to stabilise once demand stabilises in China.
"Another challenge comes from energy prices arising from Western sanctions on Russian energy exports.
"We have also experienced labour shortages over the past two financial years in which we have been reliant on more expensive outsourced workers to maintain productivity.
"Fortunately, we have managed to replenish our labour force this year and have overcome this issue," he said.
Pang said AJHB's growth strategy for FY23 is centralised around developing operations in Malaysia, locally and Indonesia.
"For Malaysian operations, we will maintain current capacity and focus on improving operational efficiency while selectively accepting new projects which meet our standards.
"For Indonesia, we will continue to invest and grow PTAJI's capacity by increasing its machinery count to expand AJHB's geographical diversification," he said.
As of November 30, 2022, AJHB's Malaysian operations have an orderbook of RM124 million and will be able to sustain the company in the mid-term as it continues to secure new projects with a few more upcoming projects in the pipeline.
PTAJI has an orderbook of RM13 million.
Furthermore, Pang said AJHB also has a strong overall tender book, standing at RM1.19 billion as of March 31, 2023, with a success rate of winning bids is around 15 per cent to 17 per cent.
From this RM1.19 billion, RM1,12 billion is tendered by Aneka Jaringan Sdn Bhd while PTAJI tendered the balance of RM68 million.
"AJHB sees opportunities in both private and public projects. Our current key projects are Quaver Residence, West Coast Expressway, Curvo Setapak and Kota Semarak," Pang said.
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