Newsbreak: Willowglen top choice for RM400m LRT3 job

This article first appeared in The Edge Malaysia Weekly, on May 29, 2017 - June 04, 2017.

WILLOWGLEN MSC Bhd and its joint-venture partner Huawei have been selected as the front-runners in the race for a RM400 million communications package in the light rail transit 3 (LRT3) project, say sources.

It is understood that Willowglen and China-based Huawei formed a near-equal partnership to bid for the project.

“Prasarana’s board has reviewed the bids [for the communications package] and has recommended Huawei-Willowglen. Its choice has been passed on to the Ministry of Finance for its final approval,” says an industry executive familiar with the matter.

It could take a month or two for MoF to finalise the pick and give Prasarana Malaysia Bhd the green light to award the JV the contract.

Historically, MoF does not reject Prasarana’s recommendations but it is not unheard-of. However, it is understood that Huawei-Willowglen leads in both the commercial and technical aspects of the bid.

It is interesting to note that this is not the first time the two companies have worked together. In fact, Willowglen was a subcontractor for Huawei in the Ampang LRT extension project. This means they have a track record with Prasarana. Furthermore, they worked under George Kent Bhd — the overall engineering, procurement and construction solutions provider for the Ampang LRT extension’s systems work package.

Today, George Kent is the project delivery partner for LRT3 alongside Malaysian Resources Corp Bhd.

For a bit of background, Huawei acted as the systems integrator, assuming the full scope of the railway telecommunications systems, while Willowglen supplied its core speciality — supervisory control and data acquisition (SCADA) subsystems.

For the LRT3 project, however, Huawei and Willowglen are bidding as partners. If successful, Willowglen will add an estimated RM200 million to its order book. For perspective, its revenue for the 12 months ended March 31, 2017, was RM144.6 million while net profit was RM20.66 million.

Willowglen’s share price has risen sharply and is hovering at a record high. The group triggered an unusual market activity query last month after its share price hit limit-up at RM1.38. Since then, the counter has inched its way up, closing at RM1.63 last Thursday. This represents a year-on-year increase of 158.4%.

It is also interesting that Willowglen has bagged a number of smaller but still sizeable contracts worth RM24.96 million in total. On May 9, it announced a RM5.87 million contract from Surbana Technologies Pte Ltd for the installation and maintenance support of a remote terminal unit and closed-circuit television (CCTV) system.

Last Thursday, it announced two more contracts — a RM9.86 million job for a “partial discharge monitoring system replacement” for power company SP PowerAssets Ltd and a RM9.23 million job from PowerGas Ltd for the maintenance of a SCADA system.

These jobs are from Singapore, Willowglen’s main market. Historically, the group draws about 70% of its revenue from Singapore.

The LRT3 job will mark a change in the group’s geographic revenue distribution. Keep in mind that Willowglen has also found success with other local clients. Earlier this year, it won a RM7.82 million contract from Tenaga Nasional Bhd — the country’s largest SCADA user.

On a bright note, Willowglen is sitting on net cash of RM32.9 million and has virtually no borrowings on its balance sheet, which puts it in a strong position to take on the sizeable LRT3 job.

http://www.theedgemarkets.com/article/newsbreak-willowglen-top-choice-rm400m-lrt3-job