Encorp scaling up construction unit

By Sharen Kaur
Published in NST on May 8, 2014

EARNINGS BOOST: Company eyeing projects that can provide returns of between 10 and 15 per cent

ENCORP Bhd, which is being taken over by Felda Investment Corp (FIC), is scaling up its construction division to boost earnings.

According to people close to the company, it is eyeing projects specifically related to property development that can provide returns of between 10 per cent and 15 per cent.

The company’s construction arm, Encorp Construct Sdn Bhd, has RM2.5 billion worth of projects in hand and are mostly related to residential and commercial development.

The construction division, coupled with Encorp’s concession business, currently contributes about 30 per cent to the company’s overall revenue.

The rest is derived from property development and the division has on-going projects with a gross development value of RM3.5 billion.

“Encorp hopes to secure contracts to build high-rise and low-rise residential and commercial properties and facilities. It will also venture into other areas in construction, that would fit its growth strategy,” the sources said.   

Encorp group chief executive officer Yeoh Soo Ann was not avaiable for comment. 

The sources said the owners of Encorp have a lot of plans for the company and that they are expanding the business and earnings of the company so new investors will come in.

Encorp was formerly controlled by Sarawak politician Datuk Seri Effendi Norwawi, who was once an agriculture minister, until a management buyout (MBO) in mid-2013.

The MBO was undertaken by Yeoh, and its chief operating officer Mohd Ibrahim Masrukin. Under their control, Encorp’s net profit surged threefold for the financial year ended December 31 2013 to RM95.6 million.

This was due to higher sales, progress of works achieved and from the revaluation of certain assets in compliance with the accounting guidelines on the company’s investment properties.

On Tuesday, FIC confirmed a Business Times report that it was finalising the prospect of buying a substantial stake in Encorp.

It plans to pay a total of RM239.7 million for the 49.45 per cent stake in Encorp. It has also offered to buy the remaining securities it does not own in Encorp.

The proposed acquisitions are in line with FIC’s strategy to build its capabilities in property development and to acquire investment properties.

“That is the whole synergy between Encorp and FIC. They have the landbank and Encorp has the capabilities,” the sources said.

Encorp’s property developments projects include its flagship Encorp Strand in Kota Damansara, Encorp Cahaya Alam in Shah Alam, The Enclave Hillside Villas in Batu Feringghi and Encorp Marina Puteri Harbour in Nusajaya, Johor.

In Australia, Encorp is developing Residences on McCallum Lane in Perth.