Muhibbah Engr to diversify (5702)

TO RELY LESS ON CONSTRUCTION: Company looking at privatisation projects in the healthcare and education sectors


MUHIBBAH Engineering (M) Bhd is looking at privatisation projects in the healthcare and education sectors to reduce its dependency on construction jobs, its business development director, Mac Chung Jin said.

"Being in the construction business, there is always the risk of not being paid on time. We have to work first before we get paid. We are looking to diversify into other sectors that can offer us great potential to grow and boost our earnings," Mac told Business Times.

"The Health Ministry has said there is a shortage of healthcare centres here so we are seeing what we can do to get into it. We are aiming for privatisation projects to have our own facilities," he added.

Mac said Muhibbah Engineering had not officially discussed with the Ministry on this but it will be starting to open its doors soon.

In the education sector, Mac said Muhibbah Engineering is looking to set up private and international schools, colleges and universities.

"There is a big need for education institutions here. Our plans are still in early stages. Once we start, it will move fast. What I like about the healthcare and education industries is that, if you can establish it in Malaysia, you can go overseas.

"Our plan is to focus on the Asean market in the near medium term, after establishing our footing here," Mac said.

Muhibbah Engineering, which has some RM3 billion worth of jobs in hand, is involved in infrastructure works like marine and port construction, airport and airline support facilities, as well as building dams, bridges, roads and railway.

It also makes cranes and holds a road and airport concession in Malaysia and Cambodia, respectively.

Currently, 55 per cent to 60 per cent of its earnings are derived from the construction sector, 25 per cent from crane manufacturing, and the rest from shipbuilding and concession.

Mac said within the next three to five years, the group expects more than 50 per cent of its earnings to come from recurring income contracts, by way of its ventures in healthcare and education.

For the fiscal year 2011, Muhibbah Engineering registered a pre-tax profit of RM114.9 million on revenue of RM1.95 billion.