Jati Tinggi eyes East Malaysia for expansion

WITH its initial public offering (IPO) oversubscribed by 16.11 times, Jati Tinggi Holding Sdn Bhd (Jati Tinggi) is poised with the confidence to realise its various strategic goals.

According to Jati Tinggi managing director Datuk  Seri Lim Yeong Seong, their inception into the ACE market was to gain recognition and enhance the stature of the group as a provider of infrastructure utility engineering solutions.

He said the increase in reputation should help in tendering for new projects and in retaining and attracting skilled employees in the industry, besides raising funds.

“We believe that by enhancing Jati Tinggi’s recognition and raising funds plays an important role in our business strategy to participate in more large-scale projects and establish our presence as a main contractor and to expand our business into new markets, specifically in East Malaysia,” he added.

As of the latest practicable date, Jati Tinggi has entered into a memorandum of understanding with G.B.U. Consultant, a company registered with Sarawak’s Registration and Contractor Registration Unit that is based in Kuching.

The company is principally involved in civil and structural consultancy works for buildings, roads, water reticulation, drainage, bridges, jettys, substations, project management and other related engineering works relating to engineering, procurement, construction and commissioning.

Lim noted that their track record allows the organisation to undertake projects of varying complexity. The aforementioned partnership was vital to opening avenues for expansion and leveraging local knowledge.

Investments in technology, like smart mapping and enterprise resource planning systems will also enhance project management efficiency.

Moreover, Lim listed compliance with local regulations and engagement with Bumiputra contractors as factors to further strengthen the group’s market position.

“Our vision involves transitioning to main contractor roles, actively pursuing large-scale projects, and expanding geographically.

“In essence, our proactive approach, technical prowess, strategic collaborations, technological investments, compliance efforts, and expansion plans collectively position us for success in the utilities industry.”

Quoting the Institute of Medical Research report, he claimed the utilities industry in Malaysia is experiencing growth with a compounded annual growth rate of 8.3%, reaching RM9.2 bil in 2022.

Economic challenges and external factors like supply chain disruptions exist, but the forecasted economic growth of 4% in 2023 and 4-5% in 2024 creates a favourable environment for utility infrastructure investments.

Furthermore, economic growth is a key driver for such investments, supporting domestic and foreign investments. The increase in population and urbanisation rates necessitates robust utility infrastructure, providing opportunities for industry players offering engineering services and solutions.

Lim also pointed out that the industry’s challenges are mitigated by the promising opportunities arising from economic growth, population dynamics and increasing demand for electricity.

Between 2022 and 2024, an estimated RM20 bil will be allocated in capital expenditure for recurring electricity generation, transmission and distribution in Peninsular Malaysia and Sabah.

Earlier in February 2023, Tenaga Nasional Bhd  (TNB) announced a capital expenditure allocation of RM12.8 bil, of which RM7 bil will be for regulated capital expenditure and the remaining RM5.8 bil for other major projects.

Notably, in August 2023, TNB announced that it plans to deploy an additional RM35 bil between 2025 and 2030 towards upgrading Malaysia’s power grid to ensure the infrastructure does not become an obstacle in the nation’s energy transition endeavours.

“This means that TNB plans to invest a total of RM90 bil into Malaysia’s grid in the coming five-year period, double the RM46 bil previously allocated for the 2018–2024 period,” he said, adding that the group is optimistic on the outlook and growth of power infrastructure utilities market in Malaysia.

Lim is of the opinion that the group needs to leverage their current capabilities to progressively assume the role of main contractor (which includes tendering for projects directly with TNB) in infrastructure utilities engineering projects and participate in more large-scale projects in the future, such that the group is able to grow the business further and improve profitability.

All in all, Jati Tinggi Group’s IPO entails a public issue of 66.8 million new shares and an offer for sale of 35 million existing shares at an IPO price of 27 sen/share payable in full upon application. – Dec 29, 2023


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