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Saturday, July 11, 2009

Sunway building up to better year

SUNWAY Holdings Bhd, one of the country's busiest conglomerates, is optimistic of doing better this year given that its overseas operations are starting to reap profits while local businesses are improving.

Founder and chairman Tan Sri Jeffrey Cheah said the group's core divisions of construction, building materials, and trading and manufacturing were growing concurrently and it was expecting higher net profit and revenue this year.

"We have invested in a lot of developments in Singapore and China over the last two and three years and are starting to see the money coming in. We hope to bring down our gearing to 0.5 time in two years, from 0.9 now," he said.

"Things have been flat in the first few months of 2009 in terms of property sales. But I think consumer confidence will come back by the fourth quarter. People with money will return and the situation will turn around.
Cheah added that the group will continue to sell non-core property assets to pare down debt.

Last year, it sold its 36 per cent stake in Sunway Infrastructure Bhd - the Kajang SILK Highway concession holder - which was the black sheep in its stable.

Sunway is selling the Sunway Hotel Hanoi in Vietnam for RM59.33 million to Sunway City Bhd. Some RM21 million will be used to reduce its debt.

"Of course we don't want to put on fire sales, but we are trying to sell some non-core assets to degear," Cheah said at the company's extraordinary general meeting in Bandar Sunway, Selangor, yesterday.

Sunway's net borrowings stood at RM669.1 million as at March 31 2009 against shareholders' fund of RM639.3 million, the bulk of which was to build up its overseas operations, Cheah said.

Sunway is supplying spun piles in China for the construction of the Hong Kong-Zhuhai-Macau bridge. It is also involved in the production of machinery parts with South Korea's Daechang group.

In Singapore, Sunway has a few mixed development projects which are ongoing.

Cheah said that Sunway was looking to grow its current businesses, albeit cautiously, and did not rule out buying the local concrete plants, quarries and asphalt factories owned by HeidelbergCement AG.

It was reported that the debt-laden HeidelbergCement, a heavy building materials manufacturer based in Germany, was selling its assets for US$200 million to US$250 million (RM714 million to RM893 million) and that Sunway was keen to buy them.

"It's very difficult to comment at this point in time on whether we are interested to buy or not. We are not sure yet," Cheah said.

By Business Times (by Sharen Kaur)

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