Advancecon Holdings Berhad

DEALINGS IN LISTED SECURITIES (CHAPTER 14 OF LISTING REQUIREMENTS) : Dealings During Closed Period

Changes in Director's Interest (Section 219 of CA 2016) - MR TAN CHEE KEONG

$ADVCON / 5281 (ADVANCECON HOLDINGS BERHAD)

DEALINGS IN LISTED SECURITIES (CHAPTER 14 OF LISTING REQUIREMENTS) : Dealings Outside Closed Period

General Meetings: Outcome of Meeting

$ADVCON / 5281 (ADVANCECON HOLDINGS BERHAD)
Research by RHB
Not Rated – TP N/A

“Ceasing Coverage”

We are ceasing coverage on Advancecon due to a reallocation of internal resources. Our last call was SELL with a TP of MYR0.21. 1Q24 results were underwhelming.ADVC reported a net loss of MYR14.5m (1Q23: +MYR0.2m), no thanks to the extension of time to complete the West Coast Expressway and East Coast Rail Link projects, which led to cost overruns. All segments were in the red except for the quarry business (PBT: MYR3.7m), which was due to one-off non-operating gains on the disposal of quarry assets amounting MYR4.6m – indicating an operational loss of MYR0.9m.

Analyst(s):
Cindy Lee
cindy.chin.hui@rhbgroup.com
Adam Bin Mohamed Rahim
adam.mohamed.rahim@rhbgroup.com

Quarterly rpt on consolidated results for the financial period ended 31/03/2024

Sarawak's Economic Takeoff: Companies That Could Benefit

In 2024, Malaysia's GDP is expected to grow by 4% to 5%. However, Sarawak's growth rate is projected to be higher, reaching 5% to 6%. With the Sarawak government allocating RM9 billion for development in its 2024 state budget, the economic outlook for Sarawak looks very promising. This budget increase signifies the Sarawak government's strong commitment to accelerating regional economic growth and development.

This substantial budget is likely to be used for various development projects, including infrastructure upgrades, support for local industries, and social welfare programs. These initiatives could attract more investment, create jobs, and improve the overall quality of life for the people of Sarawak.

For the stock market, this undoubtedly presents new opportunities. Here are a few areas that might benefit:

📍 Infrastructure Construction: With infrastructure upgrades and expansions, related construction and engineering companies could benefit. This could drive up their stock prices.

📍 Local Industries: The government might provide more support and incentives to promote the development of local industries, which could enhance the profitability of related companies and, in turn, boost their stock prices.

📍 Social Welfare: As social welfare programs are implemented, consumer purchasing power could increase, potentially driving up the stock prices of retail and consumer goods companies.

Here are some stocks related to Sarawak that could potentially benefit from Sarawak's economic takeoff:

📌 $CMSB / 2852 (CAHYA MATA SARAWAK BERHAD)

CMSB is a Sarawak-based conglomerate engaged in cement production, construction materials & trading, construction, road maintenance, property development, ICT, and financial services. This company has historical ties to the late Tun Taib, the former premier and Yang di-Pertuan Negeri Sarawak.

📌 $KKB / 9466 (KKB ENGINEERING BERHAD)

KKB specializes in steel fabrication for buildings and other products used in the construction sector. The company has also diversified into manufacturing steel pipes, pipe specials, and LPG cylinders. This expansion aligns well with the anticipated infrastructure boom in Sarawak, making KKB a likely beneficiary.

📌 $IBRACO / 5084 (IBRACO BERHAD)

IBRACO is involved in property development, construction, and quarry businesses in Sarawak. Like CMSB and KKB, IBRACO stands to gain from the increased infrastructure activities in the region.

📌 $ADVCON / 5281 (ADVANCECON HOLDINGS BERHAD)

ADVCON operates as a construction firm specializing in civil engineering and infrastructure projects, focusing on earthworks and related services. In 2023, Advancecon (Sarawak) Sdn Bhd secured a RM45.4 million earthworks contract from Petros Power Sendirian Berhad for the Miri Combined Cycle Gas Turbine (MCCGT) Power Plant Project. This positions ADVCON well for future projects in Sarawak.

📌 $ZECON / 7028 (ZECON BERHAD)

ZECON is involved in construction, water infrastructure, property development, and healthcare & hospital concessions. The company covers a wide range of sectors, including buildings, roads, bridges, and water infrastructure. On 15 March 2024, Zecon and Sarawak Digital Economy Corporation Berhad (SDEC) signed a Memorandum of Understanding to collaborate on the Kota Petra Masterplan, which includes developing an integrated urban area with smart city technologies.

📌 NAIM

Naim is a leading township developer in Sarawak with flagship developments in Miri, Kuching, and Bintulu. As a Class A Bumiputera Contractor with ISO 9001 certification, Naim has also expanded beyond Sarawak into Sabah, Peninsular Malaysia, and Fiji, working on various large-scale projects, including the MRT project in Klang Valley and road rehabilitation projects in Fiji.

$ADVCON / 5281 (ADVANCECON HOLDINGS BERHAD)
$SIMEPROP / 5288 (SIME DARBY PROPERTY BERHAD)

PETALING JAYA: Advancecon Holdings Bhd has accepted a letter of acceptance (LoA) from Sime Darby Property (Bukit Jelutong) Sdn Bhd worth RM25.35mil to undertake main infrastructure works for Tiara Residences in Seksyen U8, Shah Alam, Selangor.

OTHERSADVANCECON HOLDINGS BERHAD ("ADVANCECON" OR "THE COMPANY")
- ACCEPTANCE OF LETTER OF ACCEPTANCE BY ADVANCECON INFRA SDN. BHD., A WHOLLY-OWNED SUBSIDIARY OF THE COMPANY FROM SIME DARBY PROPERTY (BUKIT JELUTONG) SDN. BHD.

Change in Principal Officer - MR TAN CHEE KEONG

Annual Report & CG Report - 2023

PART A - STATEMENT TO SHAREHOLDERS IN RELATION TO THE PROPOSED RENEWAL OF AUTHORITY FOR THE COMPANY TO PURCHASE ITS OWN ORDINARY SHARES PART B - CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PROPOSED RENEWAL SHAREHOLDERS' MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

General Meetings: Notice of Meeting

OTHERSADVANCECON HOLDINGS BERHAD ("ADVANCECON" OR "THE COMPANY") - STATEMENT/CIRCULAR TO SHAREHOLDERS IN RELATION TO: I. PROPOSED RENEWAL OF AUTHORITY FOR THE COMPANY TO PURCHASE ITS OWN ORDINARY SHARES ("PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY") II. PROPOSED RENEWAL OF SHAREHOLDERS' MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE ("PROPOSED RENEWAL OF RRPTs MANDATE")

OTHERSADVANCECON HOLDINGS BERHAD ("ADVANCECON" OR "THE COMPANY") - ORIGINATING SUMMONS NO. WA-24NCC-123-03/2023

OTHERSADVANCECON HOLDINGS BERHAD ("ADVANCECON" OR THE "COMPANY")

VARIATIONS OF THE UTILISATION OF PROCEEDS RAISED FROM THE INITIAL PUBLIC OFFERING

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - MR LIM SWEE CHAI

OTHERSADVANCECON HOLDINGS BERHAD ("ADVANCECON" OR "THE COMPANY")
- ORIGINATING SUMMONS NO. WA-24NCC-123-03/2023

MATERIAL LITIGATIONADVANCECON HOLDINGS BERHAD ("ADVANCECON" OR "THE COMPANY")
SHAH ALAM HIGH COURT CIVIL SUIT NO. BA-23NCVC-24-04/2021 ZETI ISMRIZAN BINTI ISA & 5 ORS ("PLAINTIFFS") VS. SPRING ENERGY SDN BHD ("DEFENDANT")

Change of Address

$ADVCON / 5281 (ADVANCECON HOLDINGS BERHAD)
Research by RHB
SELL - TP of RM0.21

"Challenges Continue To Persist; SELL"

Maintain SELL with new MYR0.21 TP (from MYR0.24), 29% downside. FY23 core loss of MYR33.8m missed our estimate of MYR0.9m core earnings mainly due to higher-than-expected material prices and cost overruns. In the absence of frequent jobs or sizeable job wins, we deem valuations to be lofty, with the stock trading at 55x FY24F P/E, which is >+2SD from its 5-year mean P/E and the Bursa Malaysia Construction Index – this justifies our SELL call.

Analyst(s):
Cindy Lee
+603 2302 8105
cindy.chin.hui@rhbgroup.com

Adam Bin Mohamed Rahim
+603 2302 8101
adam.mohamed.rahim@rhbgroup.com

Quarterly rpt on consolidated results for the financial period ended 31/12/2023

MATERIAL LITIGATIONADVANCECON HOLDINGS BERHAD ("ADVANCECON" OR "THE COMPANY")
SHAH ALAM HIGH COURT CIVIL SUIT NO. BA-23NCVC-24-04/2021 ZETI ISMRIZAN BINTI ISA & 5 ORS ("PLAINTIFFS") VS. SPRING ENERGY SDN BHD ("DEFENDANT")

$ADVCON / 5281 (ADVANCECON HOLDINGS BERHAD)
Research by RHB
Sell (Maintained) - TP of MYR0.24

"Still Not Out Of The Woods"

Advancecon’s recent JV with Perak Corp (PRK MK, NR) to develop SilverValley Technology Park (SVTP) could lead to a new revenue stream. However, low construction progress billings and high material costs are still dragging its performance. With the continued underperformance, we believe its valuation is too lofty. The stock is trading at a 48x FY24F P/E, at >2SD from the 5-year historical mean – which justifies our SELL call.

Analyst(s):
Cindy Lee
cindy.chin.hui@rhbgroup.com

Adam Bin Mohamed Rahim
adam.mohamed.rahim@rhbgroup.com

$ADVCON / 5281 (ADVANCECON HOLDINGS BERHAD)
$GAMUDA / 5398 (GAMUDA BERHAD)

Advancecon Holdings Bhd has won a RM27.3mil earthworks contract for Gamuda Gardens Park in Rawang, Selangor.

OTHERSADVANCECON HOLDINGS BERHAD ("ADVANCECON" OR "THE COMPANY")
- LETTER OF AWARD FROM MUJUR MINAT SDN. BHD. TO ADVANCECON INFRA SDN. BHD., A WHOLLY-OWNED SUBSIDIARY OF THE COMPANY

KUALA LUMPUR: Advancecon Holdings Bhd via its wholly-owned subsidiary Advancon Infra Sdn Bhd has bagged a RM27.3mil contract to carry out site clearing and earthworks construction for the Gamuda Gardens Park mixed development in Rawang, Selangor.