IPO ... Benalec Holdings

Benalec Holdings Bhd, Malaysia’s second largest marine construction firm by market share, is set to take on bigger deals upon its listing on the Main Market in the first quarter of 2011.

It intends to use the proceeds for working capital. It will use it [the proceeds] to take on bigger jobs for which they are bidding now (Dec 2010).

Established in 1978, Benalec now (Dec 20101) has a total order book amounting to some RM855 million, of which RM664 million is unbilled and will last until 2016.

Among the projects the company delivered previously are the turnkey designing-and-building of the jetty, helipad and associated works at Pulau Perak, Kedah; construction of the marina at Puteri Harbour, Nusajaya Johor; and land reclamation and soil improvement works for Glenmarie Cove, Port Klang.

Notably, Benalec’s affiliated company, Oceanlec Pte Ltd, secured a contract in 2008 from the Singapore government worth S$250 million (RM598.8 million) for the supply of construction material from Vietnam and Cambodia for the Tuas View reclamation project in Singapore.

Its future growth lies in these areas of opportunity, in supporting the building of infrastructure required for Malaysia to become a high-income economy. Benalec was well-positioned to capitalise on these jobs due to its cost advantage.

Benalec’s cost advantage and strength in its niche business were evident in the company’s high margins, which were in sharp contrast to the thin margins earned by other players in the industry.

Benalec’s net profit margin hovered between 14.31% and 50.13% for FY2008 to FY2010. Its earnings per share grew at a compounded annual rate of 63% over the last three financial years.

The company’s current customer base included Malaysia’s federal and state governments, the Singapore government and private companies that were mainly from the power, property, construction, travel and leisure as well as logistics sectors, he added.

Besides marine construction, the company is also involved in the vessel-chartering and marine-transportation businesses. In terms of revenue breakdown for FY2010, marine construction contributed 88.6% while the vessel chartering and marine transportation segments made up the balance.

Benalec currently owned 91 vessels, which were mainly used to support its marine construction activities. The vessels were also deployed for chartering services to third-party clients such as dredging and reclamation contractors, and for the oil and gas, offshore construction, general cargo, and bulk cargo industries, he added.
Benalec has no direct peer listed in Malaysia. The only indirect peer would be Sarawak-based Hock Seng Lee Bhd. Even so, Hock Seng Lee is also not directly comparable to Benalec, as the former is also involved in civil engineering works and property development, apart from marine construction.