Merge energy by diversifying into auto services, plantation machinery companies
SHAH ALAM: Merge Energy Bhd ventures into automotive service and planting machinery business to increase recurring revenue.
Executive Director and CEO Datuk Abdul Jalil Abdul Karim said he recently acquired automotive service provider Arena Terbaik Sdn Bhd, which has been in business since 2013, to benefit from vehicle fleet maintenance for the public and private sectors.
The group finalized the acquisition of Arena Terbaik last week for RM50,000. Arena Terbaik is primarily engaged in the provision of repair and maintenance services and in the trade of specialized parts and equipment for motor vehicles.
Merge Energy is also in the process of applying for an Approved Permit (AP).
“It’s a small business but it’s a safe business, where we can have a small source of income, and in the future have a PA to import cars and some selected vehicles for government use,” Abdul Jalil told reporters after Merge Energy’s AGM here yesterday. , adding that it plans to import mid-range to luxury vehicles, as well as large motorcycles.
He said the group had a 30-acre land reserve in Serendah, Selangor, if they needed a large area for a workshop or yard to place imported cars.
Merge Energy is also considering land development offers for residential, commercial or industrial projects, or outright sale.
Abdul Jalil said he is also considering importing construction and planting machinery from China, as there is a high demand for such machinery given the high exchange rate to buy equipment from the United States and Europe. .
“We are eager to explore the opportunity of planting machines. We see this as a good prospect for the future, as the plantation sector is growing and there is a high demand for planting machines, ”Abdul Jalil said.
Executive Director Raizita Ahmad said that these two companies will not be his main activities but will provide regular and recurring income to the group.
Merge Energy and its subsidiaries are mainly contractors of various types of building, structural and civil works as well as a contract specialist for infrastructure and water works. Construction represents 90% of the group’s turnover.
The group recorded a net loss of RM 1.4 million in the first quarter ended June 30, 2017, mainly due to lower progress billings with project completion and no new secured projects.
Raizita said the group hopes to do better in the second quarter, with its new businesses and prospects, as well as internal restructuring for cost savings and downsizing on contract.
“Nevertheless, we have made offers, private and government, but we are considering making more offers with companies linked to the government. We are doing well in this case. We are trying to offer our services to other government sectors because they have a lot more facilities to maintain, ”Abdul Jalil said.
He added that Merge Energy has a tender dossier of 800 million ringgit for water supply and general infrastructure works, and the construction of industrial parks for government-related companies. It has an outstanding order book of RM 40 million.
Despite limited tenders for construction, especially in the water-related sectors and fewer projects due to the limited government budget, Abdul Jalil felt Merge Energy was doing well.
“Our specialty is more the construction of hydraulic infrastructure, but the government is not reducing development. They slow down the implementation, but the need is there. Selangor must build new factories.
“When bidding on water projects, the problem is that the price is so competitive. There are a lot of players and construction companies, and we’re one of them, so there’s going to be a lot of price wars but it’s okay. As long as there is a healthy margin to live, we are doing well, ”said Abdul Jalil.
Merge Energy closed down 5.26% at 36 sen yesterday with 47,700 shares traded.