CONSTRUCTION company Ahmad Zaki Resources Bhd (AZRB) (7078) expects its plantation business to contribute 30 per cent to group revenue of about RM500 million in about four years.
Currently, there is no contribution from its plantation unit. The division started harvesting in August 2009.
AZRB moved into oil palm plantation in 2004 after buying a 95 per cent equity in Indonesia's PT Ichtiar Gusti Pudi (IGP) for some RM7 million.
IGP has a certification of rights to 7,740ha for palm oil cultivation in West Kalimantan. AZRB also has a temporary licence from the Indonesian government to develop 20,000ha in the same area.
"We moved into plantation to counter any cyclical decline in construction. Plantation takes a lot of our investment, but once it is in place, there will be sizeable recurring income. Plantation can be a good cash cow after the gestation period," said AZRB chairman Datuk Aman Ahmad.
"If we do well in plantation, there will be a lot of downstream activities adding on to earnings," he said after the company's shareholders meeting in Kuala Lumpur yesterday.
The group has so far invested RM100 million in plantation, financed by internally-generated funds.
AZRB managing director Datuk Wan Zakariah Wan Muda said it will focus on building its construction division, which has a book order of RM1.3 billion, sustainable until 2013.
He said it is bidding for several building, infrastructure and civil engineering contracts in Malaysia, the Middle East and India.
AZRB is also looking at several road privatisation jobs and is keen to undertake local private finance initiative and public private partnership projects, Wan Zakariah said.
"We hope to secure some RM600 million worth of projects a year to augment our book value. We are quite ambitious about building our business overseas, but we will do it cautiously," he said.
Wan Zakariah said the group is expected to do better this year. It expects a 20 per cent jump in net profit, contributed by new projects in hand.
For the year to December 31 2009, AZRB posted a net profit of RM20.7 million on RM458.1 million revenue.
By Sharen Kaur
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