EVENING 5: MAHB terminates Pestech as aerotrain contractor
In today’s edition of Evening 5 — MAHB has terminated Pestech as the contractor for its aerotrain project, citing non-performance. Meanwhile, it was revealed today at the 1MDB-Tanore trial that BNM stopped 1MDB from taking on even more debt.
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00:00 [Music]
00:04 Malaysia Airports Holdings has terminated the $742.95 million contract awarded to Pestec International
00:11 to build and supply a new automated people mover, better known as the Aerotrain Project in KLIA.
00:17 MAHB said its wholly owned unit, Malaysia Airports Sepang,
00:21 issued the notice of termination of the APM to Pestec's wholly owned subsidiary, Pestec Technology.
00:26 In a statement to the BORS, MAHB said that the termination is due to, amongst others,
00:30 Pestec Technology's non-performance, compromising significant project milestones,
00:36 and risking delays to deliver the project within the required deadline.
00:39 Following the notice of termination, which was preceded by a notice of default to Pestec Technology,
00:44 MAHB said MAHB Sepang can proceed to recommence and complete the works
00:49 through the engagement of other relevant parties,
00:52 with a focus on ensuring that the project is completed on schedule.
00:56 MAHB says that it remains committed to assign the necessary resources
01:00 in order to minimise any potential delays to the APM project.
01:04 This confirmed an earlier report by The Edge, quoting sources that the airport operator was
01:09 planning to terminate the contract after Pestec failed to meet the timeline,
01:12 as it was more than 250 days behind schedule.
01:16 To recap, Pestec's wholly owned Pestec Technology secured the job in December 2021,
01:20 where the job scope included design, supply, installation,
01:24 testing and commissioning of the APM and associated works.
01:28 The possible termination comes shortly after IJM Corp announced its plan
01:32 to take up a 44.83% stake in Pestec in a restricted offer worth $124 million in total,
01:39 which would have made IJM Pestec's largest shareholder.
01:42 Notably, the AeroTrain contract was the biggest win for Pestec,
01:45 which has been dealing with several issues as of late,
01:48 including investigations by the MACC, which are understood to have been resolved.
01:53 SBCTIA's second quarter net profit declined 46% year-on-year to $43.06 million as the
02:03 property developers saw higher finance costs and foreign exchange losses offset
02:08 the group's higher gross profit.
02:10 These downsides mitigated the group's operational efficiencies,
02:13 which saw gross profit rise 13% year-on-year to $311.29 million,
02:18 despite revenue declining 7.4% to $942.7 million.
02:23 For the first half, earnings fell by 33% year-on-year to $98.5 million from $147.6 million,
02:30 while revenue inched up by 1.3% to $1.91 billion from $1.89 billion.
02:37 In a separate statement, SBCTIA said it has secured total sales of $2.56 billion for the
02:41 first half, equivalent to 60% of its FY20-23 sales target.
02:46 The developer added that it has secured total bookings of $470 million as at June 30, 2023,
02:53 and that its key focus is to convert these bookings into sales in a timely manner.
02:57 SBCTIA currently has 44 ongoing projects and unbuilt sales,
03:01 totaling $6.82 billion as at end-June, giving it earnings visibility in the short to mid-term.
03:07 President and CEO Datuk Chung Kai Wai says that SBCTIA will continue to focus on delivering
03:12 quality developments and sustainable solutions, while continuing its plan to move towards a
03:17 lighter asset structure and leveraging on its effective remaining land bank of 6,870 acres,
03:23 with a total GDP of RM125.77 billion.
03:28 He adds that the group remains confident of achieving its FY20-23 targets.
03:38 Former Bank Negara Governor Tan Sri Dr Zetty Akhtar Aziz said the central bank stopped
03:42 heavily indebted 1MDB from a grand scheme in 2014 to borrow even more money,
03:48 to the tune of RM4.9 billion, from foreign offshore sources.
03:52 This was especially since 1MDB was still unable to provide any information in 2014
03:57 on what funds were invested overseas because there were none.
04:01 Zetty, who was testifying as the prosecution's 46th witness
04:05 in ex-PM Datuk Sri Najib Razak's 1MDB Tanore trial, told the court that there had been
04:10 increasing suspicion over 1MDB and the dubious nature of its transactions.
04:15 At the same time, BNM had to consider that the state-owned entity
04:19 may have to keep money overseas to repay its foreign debt.
04:22 Najib's lawyer Tan Sri Muhammad Shafi Abdullah had asked Zetty about the attempt by 1MDB
04:27 to get BNM's approval to raise an additional RM4.9 billion in 2014 by issuing more bonds.
04:34 Zetty explained that based on increasing information from the foreign network of regulators,
04:38 1MDB wanted to use the amount raised to pay off existing debt,
04:42 even though it was unable to explain how it became so indebted.
04:46 Zetty said 1MDB had appealed to BNM to reconsider its decision,
04:50 only for the central bank to reject it as 1MDB had incurred a high level of debt since 2009,
04:56 which was a big problem for the country.
04:58 Having failed at getting BNM's approval in 2014,
05:01 Zetty said that 1MDB then tried to approach the Securities Commission for help
05:06 for its fundraising needs, but added that she didn't know the details.
05:10 Malaysia Marine and Heavy Engineering Holdings registered a net loss of RM388.7 million for its
05:21 second quarter versus a net profit of RM22 million a year earlier as cost provisions hurt its bottom
05:27 line. In contrast, revenue spiked more than double to RM1.06 billion from RM406 million a year ago,
05:33 mainly due to higher revenue from the engineering segment.
05:36 For the first half, the group posted a net loss of RM385.16 million
05:41 compared to a net profit of RM24.7 million a year before,
05:45 while revenue improved 90% year-on-year to RM1.55 billion.
05:50 On its prospects, MHB said that the heavy engineering segment will continue to face
05:54 challenges in executing ongoing projects within the originally budgeted margins
05:59 due to the impact of raw material price escalations and global supply chain disruptions.
06:04 Meanwhile, demand for dry docking activities is expected to increase,
06:08 as vessel owners prepare for a rise in seaborne trade requirements for the remainder of the year.
06:13 MHB said it will continue to explore opportunities in both domestic and international markets,
06:19 with increased emphasis on decarbonisation and renewable energy.
06:22 It added that it is also looking into ways to improve its contracting strategies with clients
06:28 through the alliance concept or on a cost-plus basis,
06:31 where possible, to mitigate the risks of global inflation for future projects.
06:35 UEM Group has secured majority shares in Senergy SEA, a sustainable energy solutions company from
06:46 sovereign wealth fund Kazana National, and plans to grow its new subsidiaries, RE Business, Bernama
06:52 Reports. The group said Senergy, incorporated in 2008, specialises in reducing carbon footprint
06:58 through investment in RE, specifically biogas, biomass and solar, as well as energy efficiency
07:04 projects, and is Malaysia's largest grid-connected palm oil mill effluent biogas player.
07:09 UEM Group in a statement also said that Senergy had a portfolio of 23 biogas power plants in
07:14 Malaysia and Indonesia, with a total generation capacity of 39.6 megawatts, and 20 solar projects
07:20 across Malaysia, consisting of both solar farms and rooftop solar, with a cumulative capacity of
07:26 over 37.6 megawatt peak. UEM Group MD, Datuk Mohd Izzani Gani, commented that Senergy had
07:32 a commendable track record with projects and presence across the country. He adds that they
07:37 see immense potential in the company and are committed to nurturing as well as providing
07:42 the necessary expertise, operational and financial support that will enhance its
07:46 operation capabilities, secure more projects and usher in a new era of growth.
07:51 Mohd Izzani pointed out that RE is one of the key sectors and immediate priorities of UEM Leicester,
07:56 the green industries arm and wholly owned subsidiary of UEM Group, due to the sector's
08:01 strong market attractiveness and high importance to Malaysia's decarbonisation agenda.
08:06 [Music]