Extracted from Annual Report 2022
Engineering & Construction Division
Operation Review
During the year under review, the Engineering & Construction division secured a total of RM230 million worth of new contracts in Malaysia ie Package 3 – Cadangan Reka dan Bina Sistem Pelupusan Enapcemar Untuk Loji Rawatan Air Langat 2 from Pengurusan Aset Air Berhad (“PAAB”) valued at RM210.0 million as well as several sewage treatment plants and sewerage reticulation pipelines projects.
The scope of Package 3 project from PAAB is to design and build a residual conveyance and disposal system for Langat 2 Water Treatment Plant, which includes a pipe conveyor of approximately 2,000 meters from the plant to the residual storage shelter near Bukit Enggang Balancing Reservoir.
The award of these projects is a measure of confidence that our clients have in the division which has more than 48 years strong track record and expertise in the water & wastewater industry.
Meanwhile, the division has also successfully completed several major projects in FY 2022, as follows:
1. Design & build 120 MLD water treatment plant, 140 MLD raw water intake, raw water pipeline, TW pipelines and service water tanks for Kuala Terengganu Utara (“KTU”) Water Supply Scheme, Terengganu
2. Rehabilitation works of Vacuum Sewerage System at Bandar Ambang Botanic
Laying of Vacuum Sewer & Telemetry Cable with total length of 4,090m for rehabilitation works of vacuum sewerage system at Bandar and Ambang Botanic.
The major on-going projects under this division are as below:
Water engineering:
1. Langat Centralised Sewage Treatment Plant – Package 1 & 2
2. Upgrading of Telibong II from 80 MLD to 160 MLD
3. Langat 2 – Package 15(4), Pipeworks
4. Customer Call Center, Monitoring & Maintaining DMZ, Meter Reading and Billing for Sandakan Water Department
5. Package 3: Design & Build Dewatered Residual Disposal System for Langat 2 WTP
Wastewater engineering:
1. External Common Gravity Sewer Mains at Jalan Segambut
2. Sewage Treatment Plant STP2A (Module 3 - 50,000 PE with Ultimate Capacity 200,000 PE) at Mukim Kapar
3. External Sewerage and Drainage Works, Mukim Kuala Lumpur
The division is actively tendering for NRW projects and looks to expand its footprint in Malaysia, including other districts of Sabah.
The Road Ahead
Prospects for the division remains resilient with the government’s continuous initiative and investments to improve the water quality and services, manage flood mitigation & reduce NRW rate in Malaysia.
The Water Sector Transformation 2040 (“WST 2040”), a two-decade agenda outlined in the 12th MP, aims to enable the water sector to significantly contribute to national growth and wealth creation by becoming a regional water industry hub. The goals include achieving water supply accessibility by 98% especially in rural areas and islands, sewerage services coverage to 90% and NRW reduction rate at 25% by 2025. During the re-tabling of the revised National Budget 2023/24, the government expects to re-tender six flood mitigation projects latest by June 2023, including projects in Sungai Johor in Kota Tinggi, Johor; Sungai Rasau and Sungai Klang, Selangor; and Sungai Golok, Kelantan.
We are confident of securing more water and wastewater projects in the new financial year. Our current total tendered/ pre-qualified projects are valued at RM1.2 billion as at 31 December 2022, for both local and overseas projects whilst the outstanding orderbook stands at RM291.51 million, with 85% from water unit, 14% and 2% from wastewater and NRW unit respectively. The division continues to prioritise cost and operational efficiency as well as technology and innovation as the key strategic growth drivers to create long term sustainable values for our stakeholders.
Healthcare Division
Operation Review
In FY 2022, the division launched 5 new products and penetrated into 4 new markets namely Myanmar, Philippines, Kenya and Russia. New products launched in FY 2022 are 300mm diamond grip examination gloves, neurosurgeons brown surgical gloves, orthopedic brown surgical gloves, gynecology 16” and 18” gloves and 240mm dual colored examination gloves. The Research & Development team continues innovating niche products to meet customers’ needs & expectations. In FY 2022, the division has footprint at various regions in 15 countries in total with diverse range of products to align with rapidly changing markets, as below:
JREMT continues to expand in existing markets via various marketing channels, such as social media, personal marketing representatives, digital marketing and exhibitions. In FY 2022, JREMT has participated in the following exhibitions to reach out to potential customers and engage with existing customers:
To ensure consistent product quality and improve production efficiency, JREMT has invested in automation in its production process. Auto-pelleting & auto-pouching machine are used to seal pouches, which is 8 times faster than using manual labour. Affected by the travel restriction in earlier years due to the pandemic as well as regulations in importing foreign labour, the move to invest in automation has helped to solve the division’s labour issues. In FY 2022, 46 foreign labour from India were recruited.
JREMT’s products are certified with FDA certifications, CE Marking and various applicable ISO certifications. Besides this, the division has been a member of Supplier Ethical Data Exchange (“SEDEX”) since February 2022 and attended to customers’ requirement on Sedex Members Ethical Trade Audit (“SMETA”). During the year under review, 1 SMETA audit have been conducted in February and JREMT has successfully complied with 99% of the audit which are based on 4 key areas: health and safety standard, labour standards, environment & business ethics.
Status of the material litigation between JREMT and Aspen Glove Sdn. Bhd. (“AGSB”) is on-going. Following JREMT’s counterclaim filed on 19 December 2022, AGSB has filed a write against JREMT on 25 January 2023. The suit is non-meritorious and JREMT will vigorously defend the suit.
The Road Ahead
The government’s revised 2023 Economic and Fiscal Outlook reports that growth in the manufacturing sector is expected to moderate this year to 3.9%, down from 8.1% in 2022 and 9.5% in 2021, amid moderate economic activities.
Demand for gloves are currently lower than pre-pandemic level due to several factors such as increase of raw material prices, supply chain disruption due to the Ukraine-Russia war, new competitors in the industry, coupled with customers holding off restocking activity because of excessive glove inventory. Nevertheless, given the rising hygiene awareness & health standards globally, the Company anticipates that the global glove demand will remain promising in long term. This is due to several factors such as increasing hygiene standards in both non-medical and medical sectors, growing aging population with the elderly being more susceptible to higher risk diseases, normalized customers inventory levels after the earlier overstocking, progressively stringent health regulations and emergence of new health threats.
The division’s current strategies are to focus in investing in R&D for better operation and product quality as well as enhance cost and operational efficiency.
Technology Services Division
Operation Review
During the year under review, VBT has successfully delivered 33 cell sites on-air along LRT corridor for its clients which include Celcom, Maxis, Digi and Digital Nasional Berhad (“DNB”) in FY 2022, whereby 24 out of the 33 sites are fifth-generation cellular network-based (5G) for DNB. This has also provided opportunities to build, manage & operate mobile broadband, fixes service and other digital services to Transit-Oriented-Developments (“TOD”).
Under its Enterprise Business services, in FY 2022, VBT has successfully clinched contracts from 3 new customers, ie: View Qwest Sdn. Bhd., XMT Technologies Sdn. Bhd. & YTL Communication Sdn. Bhd.. Together with 2 other existing customers – Allo Technology Sdn. Bhd. & X86 Network Sdn. Bhd., VBT has secured 17 enterprise business sites and delivered 10 in FY 2022. The remaining 7 sites are expected to be delivered in FY 2023. In FY 2022, VBT has secured and delivered a total of 3 mobile backhaul services for U Mobile & Celcom.
The Road Ahead
Under Budget 2023, DNB, as the single Wholesale 5G Network Provider, will expand 5G network nationwide to achieve 80% of coverage of populated areas (“Copa”) areas with infrastructure expenditure allocation worth RM1.3 billion by end-2024.
VBT’s focus in near and medium term is on the 5G pillar structure deployment for DNB. Though the revised 5G wholesale fee will affect the competitiveness of the new sites and bandwidth capacity expansion contracts, VBT will work closely with the authorities to ensure compliance, while enhancing its cost efficiency to increase competitive edge.
In terms of its enterprise business section, VBT continues to explore greenfield and brownfield areas and provide fixed broadband services through collaboration with service partners at commercial/residential buildings. With the Jalinan Digital Negara (“JENDELA”) initiative in which the government aims to implement digital connectivity to unserved locations with low mobile connectivity penetration, VBT are readily-available to provide the necessary solution within Prasarana’s Row Corridor.
Transportation Division
Operation Review
As at FY 2022, Eco-Coach & Tours (M) Sdn. Bhd. (“ECT”) serves its multinational companies' clients, which include Intel, Paramit, and Analogue Device (“ADI”) with total fleet size of 139 vans, 45 coaches, 9 MPVs, 1 lorry and 7 limousines. In order to provide safe, timely and tracking services to its clients and optimise cost efficiency, ECT invested on improvements to its Senstrac FOCAS Passenger Transport and Tracking System (“Senstrac”) with an on-demand transport system to enable passengers to book their journey through its application system at a convenient time (during service operating hours), and to be picked at a designated convenient location. To date, a total of 196 vehicles has been installed with the Senstrac system. The division seeks to diversify its commercial relationships and prioritize the marketing and promotion of the Senstrac to new potential clients in non-current industries.
Under its industrial product logistic unit, Green Fleet Sdn. Bhd. (“GF”) operates 5 stainless steel and mild steel bulk tankers for clients in the palm oil and soy oil industries, including Soon Soon Oilmills Sdn. Bhd. and PGEO Edible Oils Sdn. Bhd. Due to the recovery of global economic activities after the COVID-19 pandemic, this segment has revived and continues in its development.
The Road Ahead
Moving forward, the division will look to increase the provision of transportation services to meet the rising demand, and maintaining and enhancing existing commercial relationship with its existing clients.
The increased interest among MNCs to set up their manufacturing base in Malaysia would generate significant multiplier effects on economic growth.
ECT intends to expand the business through the following strategies:
Renewable Energy Division
Operation Review
As at FY 2022, Inergist continues to generate 1.93 gigawatt-hours (“GWh”) of low carbon renewable energy from the rooftop solar photovoltaic system at HeveaPac Sdn. Bhd. (“HeveaPac”). This translates into an offset of 1,236 tonnes of CO2 emission per annum.
In the UK, Salcon Power has successfully generated 1,234.74 kWh from 405 residential rooftop solar photovoltaic systems.
The Road Ahead
We see positive indicators that the market for renewable energy system, particularly solar photovoltaic system installation will remain resilient. In Budget 2023, Bank Negara will provide RM2 billion in funding for sustainable technology start-ups and help small and medium enterprises implement low-carbon practices. This is part of the government’s measures to support and encourage green practices among local businesses and ultimately achieving the Net Zero Carbon country by 2050.
We will continue to work closely with our partners to support the development of the renewable energy segment.
Property Development Division
Operation Review
The Group entered into a Joint Venture Agreement (“JVA”) with Exsim Kebun Teh Sdn. Bhd. (formerly known as Exsim Hills (Sabah) Sdn. Bhd.) through its subsidiary, Nusantara Megajuta Sdn. Bhd. to undertake a multiple phased mixed-use development project in Johor Bahru. Under the terms of the JVA, Exsim will pay RM140 million as landowner’s entitlement to Salcon upon reaching the milestones as stipulated in the agreement.
The joint venture would allow Salcon to unlock the value of the development lands by tapping on the skills, track record and experience of the developer who provides property development services ranging from the inception to the completion of a portfolio for commercial and industrial projects.
The Road Ahead
Malaysia's property market remains challenging as weak consumer sentiments persist as a result of weaker economic prospects and volatility in the Malaysian Ringgit. Nonetheless, the Group continues to seek opportunities and will evaluate various proposals with caution in the current market environment.