Bintai Kinden doubles down on construction business to exit PN17

• "The increased focus on the construction business would diversify the group’s income stream and reduce its reliance on its existing core business in the M&E engineering services segment,” Bintai Kinden said in a statement on Friday.

KUALA LUMPUR (Sept 27): Mechanical and electrical (M&E) services specialist Bintai Kinden Corp Bhd (KL:BINTAI) is doubling down on its construction division as part of its proposed regularisation plan to uplift the company from its Practice Note 17 (PN17) status.

The group anticipates to divert 25% or more of its net assets into the division in a proposed diversification, and said the division is expected to contribute 25% or more to its net profit moving forward.

Bintai Kinden intends to focus on M&E engineering as well as the construction business to turn around its business performance.

"The increased focus on the construction business would diversify the group’s income stream and reduce its reliance on its existing core business in the M&E engineering services segment. Moreover, the group may potentially benefit from resource-sharing and cross-selling opportunities given the complementary nature of both the M&E engineering services business and the construction business," it said in a statement on Friday.

Bintai Kinden managing director cum chief executive officer Datuk Tay Chor Han said the value of work done in its construction division reached RM38.9 billion in the second quarter of 2024, up 20.2% year-on-year, driven by civil engineering and residential building projects.

"We are well-positioned to benefit from this momentum through our diversification into construction, which we expect will significantly boost our revenue and contribute to more than 25% of our profits in the near future," he said.

Bintai Kinden is also planning a share capital reduction to cancel up to RM160 million to reduce its accumulated losses and improve its financial position, and a private placement involving up to 244 million new shares or 20% of its current issued shares to raise up to RM19.5 million to repay borrowings and for working capital.

The additional working capital funds will be used mainly to rebuild the group’s workforce to support the expansion in business activities moving forward, it said.

The group also wants to grant Tay an option to subscribe up to 146.40 million new shares, representing 10% of its enlarged total issued shares following the completion of the proposed placement. This is complemented by an employees' share option scheme that involves up to 15% of its issued shares "to incentivise and retain key personnel, ensuring the company has the right talent to execute its turnaround strategy", it said.

"With the regularisation plan and a strong market outlook, we are confident in delivering sustainable growth and creating long-term value for our shareholders," Tay added.

The proposed regularisation plan is subject to approval by Bursa Malaysia. Once approved, Bintai Kinden expects to complete the plan's implementation within three months from the date of approval.

Bintai Kinden slipped into PN17 status in March 2023, after its subsidiary Optimal Property Management Sdn Bhd defaulted on financing facilities totalling RM109 million from MBSB Bank Bhd, in connection with the construction of a student campus accommodation.

For the financial year ended March 31, 2024 (FY2024), Bintai Kinden posted a net profit of RM4.06 million, versus a net loss of RM51.11 million in FY2023, thanks to the recognition of fair value gains and the conversion of redeemable convertible preference shares.

Revenue, however, declined 68.31% to RM36.79 million from RM116.11 million a year ago, mainly due to the termination of Tenaga Nasional Bhd (KL:TENAGA) contracts and the absence of new major projects.

Bintai Kinden shares finished 0.5 sen or 4.76% lower at 10 sen on Friday, giving the group a market capitalisation of RM122 million.

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