IREKA Corp Bhd expects to swing into the black by early 2016, after experiencing three consecutive years of losses.
The group expects the ‘bad luck’ to end after bagging RM1.2 billion worth of contracts.
“Ireka has been recording losses in the last three years due to a drop in construction turnover,” said Ireka executive director Monica Lai Voon Huey after its annual general meeting, here, yesterday.
“However, now that we have RM1.2 billion worth of order book, with RM810 million outstanding, we expect to swing back into the black in the year ending March 31 2016,” she said.
The RM1.2 billion contracts consist of seven projects and is expected to contribute up to RM400 million a year in revenue to the group.
She said as of the end of the first quarter ended June 30 this year, the company’s gearing stood at 0.9 times gross level and 0.6 per cent net level, both of which are still manageable for net purchase.
Ireka’s construction business contributes 80 per cent to the group’s total revenue and the remaining is contributed by its real estate segment.
“We expect the construction and real estate contribution to even out by the financial year 2017,” said Lai.
Meanwhile, Ireka executive director Lai Voon Hon said the impending implementation of the Goods and Services Tax (GST) was expected to have minimal impact on the group’s real estate business.
“Properties have been placed on the GST-exempt list, so we will not feel much impact but we will see impact from the construction materials as that will not be exempted from GST,” he said.
As for the firm’s wishlist for the upcoming 2015 Budget, Lai said he is hopeful that the government will retain the My First Home Scheme (MFHS), which allows first-time home buyers, who are mainly young adults, to obtain 100 per cent financing from financial institutions to enable them to own their first home without having to pay a 10 per cent down payment.
“This is not just beneficial to the industry, but also to the first home buyers, too.”
The company currently has 26.3ha of landbank that has an expected gross development value (GDV) of RM2 billion.
“Our RM2 billion GDV is mostly within the Klang Valley and Nilai, Negri Sembilan, as per our business plans,” he said.