Q&A from Principal Adviser, Sponsor, Placement Agent and Underwriter - AmInvestment Bank

Construction company Vestland Bhd, en route to a listing on the ACE Market of Bursa Malaysia on Jan 31 aims to raise RM56.1 million from its initial public offering (IPO). Here is the highlighted Q&A of the online webinar IPO Roadshow: Vestland Berhad which was briefed by the Principal Adviser sponsor, placement agent, and underwriter - AmInvestment Bank summarized by us for you to have a better understanding of this company.

Q1

Q: Since the vestland is already involved in the majority of the value chain that you say, why doesn’t the company might as well just take up the job as the developer to become a full flash provider? Are any things they lack?

A: Yes it’s actually a natural progression for a construction company graduate as a property developer, but for Vestland - Datuk Liew's view he still sees opportunities as a contractor so he has no plan to be a property developer for the next few years and also he is very happy with the margin and believe he can grow further.

Another thing is why he doesn’t want to become a property developer is because when you come to become a property developer, how you grow a company is actually based on how much money you have because you need money to buy land so your money is all stuck in your fixed assets which is the land. So comparatively Datuk Liew prefers to hold cash as a contractor.

Add on view from a different speaker

It is also because, from a construction point of view and the developer's point of view, the cash flow management is also different. And at this point of time even being on a construction part of business, they come in and they have created this ecosystem, especially with this one or two private side customers that they’ve been quite sticky with them.

And also if we look at the debt since they are close to net cash or very low in terms of the net gearing, why they still need to get listed is also mainly because of the profiling. The company now already has the CIDB grade 7, the fact that they get listed is because they want to tender for the bigger projects. The bigger project is maybe more than 500 million close to 1 billion. All this in some sense when they tender it, you need part of the criteria you need to be a listed company. Number 2, because now with all these ongoing projects they need the funds in terms of taking on the contract to get the bigger contracts.

Q2

Q: Among the company’s clients, I can see that the government is one of the major customers and the company got quite a number of government projects. I just wonder are they Government-linked companies (GLC)?

A: To answer your question, they are not GL, so actually Datuk Liew is fortunate that he was invited to bid for all these government projects and based on his historical project like the TUDM, so the government agencies like him so much that why they always ask him to bid and due to this design and view, and their value engineering method, all this biding a lot of times they fall back to the project cost and this is where they managed to win the project over the other competitors.

Q3

Q: Does the company plan to expand the customer base to avoid high-concentration customer risk?

A: The company is going to go by 3 prompts basically private, industrial, and last but not least the government.

Q4

Q: Current rising price of commodities have any impact on the company? Is the company facing any labour shortage issues? And when do you expect this situation to improve?

A: In terms of commodities, what we understand is cement and that is based on market price so they can’t really buy forward but for items like raw material they are able to buy forward for example like the house is something that they will manage the cost to expansion so they are able to manage the costs. In terms of labour, they actually don't have many problems with labour because they have actually ten working teams right now so they are able to rotate their team as well. And here is extra to share with you all that the company recently got approval to bring in 200 workers, so these workers will be coming in gradually over the next 1 to 1 and half years.

Q5

Q: How do you see the next 2 years' trend in the property sector?

A: Okay I don’t think I will be able to answer the sector outlook. But what Vestland has guided is that for the next two years, they will be focusing on the 3 main groups of clients. So what these 3 groups of client has actually shown them the trend is actually positive and they are actually very confident working to focus on these 3 segments

Add on info

3 groups of clients

Government - affordable housing, building for government/police/army.

Armani Group & Binastra - property

Logistic - warehouse

Click here to refer the IPO - Vestland Berhad (Part 1)

Click here to refer the IPO - Vestland Berhad (Part 2)

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