Serba Dinamik inks MoA to kick-start RM1.4 bil Pengerang project

KUALA LUMPUR (Aug 18): Serba Dinamik Holdings Bhd has inked the first of two memorandums of agreement (MoAs) to kick-start its RM1.4 billion Pengerang Integrated Development Project (PIDP) in Johor that aims to complement the Pengerang Integrated Petroleum Complex (PIC) by Petronas.

Its wholly-owned subsidiary Serba Dinamik Sdn Bhd today entered into an MoA with Izin Budi Sdn Bhd to develop industrial and commercial projects on a 15.87-acre land parcel in Pengerang.

Under the MoA, Serba Dinamik said it will pay RM24.2 million to Izin Budi, which represents the minimum return and a guaranteed return of minimum 7% of the gross income from the planned development.

Speaking to the media during the signing ceremony, Serba Dinamik group managing director Datuk Dr Mohd Abdul Karim Abdullah said the 15.87-acre development will be part of the larger 132-acre PIDP, which will have an integrated industrial, commercial and residential components.

"Today, you are not only here to witness a land sale but to witness history in the making as we are going to establish Malaysia's first oil and gas maintenance, repair and overhaul (MRO) as well as inspection, repair and maintenance (IRM) Global Centre of Excellence," said Mohd Abdul Karim.

The MRO and IRM facility will strategically complement Petronas's PIC given the large number of plants, machinery and equipment that will require regular MRO, IRM and turnaround services to maintain efficiency and safety, he added.

"Furthermore, the project will also incorporate technical and vocational education and training to develop relevant skills for Malaysians in particular, which will serve as a regular supply of skilled resources for the petrochemical industry in Pengerang," said Mohd Abdul Karim.

Witnessing the signing ceremony, Johor Menteri Besar Datuk Seri Mohamed Khaled Nordin said PIDP is expected to attract service providers both local and foreign to set up shop in Johor.

"Other than the MRO and IRM project, there will be several projects in new fields including robotic and biotechnology in Johor. We are also looking to turn Johor into a health hub and look at some other investments in tourism," said Mohamed Khaled.

In a Bursa Malaysia filing yesterday, Serba Dinamik said it also intends to separately enter into an MoA with AlMurisi Holding Sdn Bhd for the construction work of a 70-acre mixed residential and commercial development called Pengerang Northshore Residence with RM600 million estimated gross development value (GDV).

From the overall GDV of RM1.4 billion for the entire 132-acre PIDP, some RM300 million is for the Pengerang Eco-Industrial Park, which comprises the MRO and IRM Global Centre of Excellence as well as an 18-acre Plant Turnaround Village.

The Plant Turnaround Village will provide services for during shutdowns of plants in neighbouring PIC, which involves scheduled downtime to allow the undertaking of maintenance, cleaning, inspection and repairs.

Another RM500 million GDV is for a nine-acre Pengerang International Commercial Centre (PICC) which will comprise corporate office towers alongside serviced apartments, retail podium as well as conference and banquet facilities, among others.

Serba Dinamik expects to commence construction of the Pengerang Eco-Industrial Park in 2018.

The overall PIDP development is expected to cost RM1 billion, with Johor-based engineering consultant Perisind Samudra Sdn Bhd as project manager. Serba Dinamik as land owner will also undertake the engineering, procurement, construction and commissioning (EPCC) works.

In a note this morning, TA Securities estimates that the EPCC works may boost Serba Dinamik's orderbook by RM840 million to hit RM1.54 billion with project launches.

On the sidelines of the signing, Mohd Abdul Karim told theedgemarkets.com that the financing details for the project is still being ironed out and does not rule out a possible sukuk issuance for that purpose. The company was listed as recently as February, raising about RM600 million.

"Normally we go for a 30:70 mix, meaning 30% internally generated cash and the rest from financing," said Mohd Abdul Karim.

However, the financing side will likely only be finalised in six months' time after all required approvals are obtained, he added. — theedgemarkets.com

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