KUALA LUMPUR: Sarawak-based engineering and construction group Hock Seng Lee Bhd (HSL) is all out to cater to the rising demand for affordable housing in the state’s major urban centres, especially Kuching.

The group is seeking to build People’s Housing Programme (PPR) homes on a bigger scale after its previous involvement in PPR projects in Kuching and Bintulu.

“Rapid urbanisation and industrialisation [in Sarawak] have led to strong demand for affordable homes in a number of Sarawak’s major [towns],” said HSL managing director Datuk Paul Yu Chee Hoe. “We would like to be more involved in offering solutions to consumers’ demand.”

“Development in Sarawak is moving at a fast pace. Both the federal and state governments have a clear agenda to drive the state forward,” he told The Edge Financial Daily in an email interview.

Yu stressed, however, that while the property segment will be among the group’s focus areas going forward, the engineering and construction sectors will remain its main moneymakers.

“We are seeing some weakening in the local property market due to the government’s fiscal cooling measures. However, well-designed homes built in strategic locations always sell well.

“Our property sector remains a relatively small part of the group’s business but it is growing and we see it contributing more than it already has to our bottom line,” he said.

At the moment, the marine and civil engineering as well as the construction sectors contribute about 80% of HSL’s top line, with the remaining 20% coming from the property sector via its property development arm, Hock Seng Lee Construction Sdn Bhd.

Yu said that Hock Seng Lee Construction is set to launch several residential and industrial projects with a combined gross development value (GDV) of RM160 million this year.

Firstly, the company will launch new phases of its long-term project, La Promenade, as well as in Vista Industrial Park and the Samariang Aman residential estate in Kuching.

For La Promenade, which is the company’s flagship mixed development first launched in September 2015, Hock Seng Lee Construction will implement the second residential precinct, Precinct Luxe, with 32 units of double-storey super-link homes worth about RM30 million.

“The first residential precinct within La Promenade, Precinct Premiere, which offers homes priced between RM1.35 million and RM3.1 million per unit, has seen Phases 1 and 2 approximately 70% sold with sales value now approaching RM80 million,” Yu said.

Vista Industrial Park, meanwhile, offers industrial/factory lots for small and medium enterprises. Blocks 2 and 3 — comprising 55 industrial lots in total worth RM68 million — will be launched sometime this year.

As for Samariang Aman, all 642 units in the first phase have been taken up, Yu said.

The construction of Samariang Aman 2 is in progress with 150 home units already completed, and the company is planning to launch 84 units of double-storey terrace and semi-detached homes for the subsequent two phases (both phases carry a collective GDV of RM45 million).

Still, Yu noted that “town development” in Sarawak’s case is not simply limited to building new homes. This encompasses better amenities, utilities and communication, as well as greater access to services for rural folks.

According to Yu, this can be well achieved by effectively alleviating issues commonly dealt by growing cities by building better roads, affordably priced homes, educational institutions, as well as centralised sewage and flood mitigation systems.

With that, HSL is bidding for more infrastructure projects. Though Yu did not disclose how much these projects are worth, he said the group is awaiting the outcome of its bids for mid-sized civil and infrastructure job contracts, specifically in the Samalaju Industrial Park.

Samalaju is just one of three of the Sarawak Corridor of Renewable Energy (SCORE) growth node towns. Elsewhere, the group has done major works in Mukah, where it was involved in the construction of ports, airports, campus buildings and other works related to the Tanjung Manis halal hub.

In 2016, HSL secured two major jobs valued over RM2.45 billion, namely Pan Borneo Highway Work Package 7 (valued at RM1.71 billion) and Phase 2 of the Kuching centralised wastewater management system project (RM750 million).

“We established an operations centre in Sibu to oversee our portion of the Pan Borneo Highway and physical work has commenced [while] the second package of the centralised waste water management system is in the preliminary analysis and investigative stage,” he said.

Yu said HSL usually has about 30 projects — ranging from reclamation to civil, infrastructure and building construction works — in hand at any one time spread across Sarawak.

“These contracts are normally valid for up to 36 months but our mega projects will keep us busy for about four to six years,” Yu said.

The group’s order book is valued at RM2.5 billion, of which RM2.1 billion — as at end-December 2016 — was outstanding.

“Nevertheless, we are still trying to secure more projects which draw on our key expertise in the engineering department. Tenders are being generated from the SCORE region, notably small- and medium-sized infrastructure contracts in the SCORE growth node town of Samalaju,” said Yu.

HSL’s net profit fell 8.5% to RM16.34 million for the third quarter ended Sept 30, 2016, from RM17.85 million a year earlier. Revenue slipped 14.1% to RM136.03 million from RM158.44 million.

“There have been slight impacts on our margins lately due to fluctuation in material prices as well as rising labour costs and a weak ringgit. Nevertheless, we will be gaining more substantial progress claims as major projects gain momentum,” said Yu.

HSL is also unperturbed by the boardroom tussle last year which saw a shareholder, Yii Chee Ming, suing the group along with Yu, executive directors Tony Yu Yuong Wee, Lau Kiing Kang and Lau Kiing Yiing over disclosure issues related to the acquisition and disposal of shares in the group’s holding company.

“The litigation is ongoing but it is not affecting our businesses. We will continue to report strong financial outcomes,” said Yu. “There is so much to come for Sarawak and we are a proxy for that progress.”