KUCHING: Hartanah Kenyalang Bhd is pre-booking materials and locking in costs to manage rising construction expenses linked to global uncertainties.
Managing director Seah Boon Tiat said the company is taking a short-term view, planning three to five months ahead as the duration of current geopolitical tensions remains unclear.
“This is a global issue that we cannot avoid. All contractors are facing it,” he said during the group’s post-annual general meeting briefing at a hotel here yesterday.
“To manage this, we have pre-ordered most of the materials needed for the next three to five months.”
Seah said key inputs such as logs and aluminium for the Sarawak Stadium project had already been secured to reduce exposure to sudden price spikes.
At the same time, the group is limiting risk by outsourcing certain technical packages to specialist contractors on fixed-cost terms, particularly for components where prices have risen sharply.
He cited the stadium’s roof membrane works as one example, where the company is working to lock in costs and reduce volatility.
Hartanah is also redesigning parts of its construction process to improve efficiency. Sections of the stadium facade have been converted into larger prefabricated units, each about five metres long, allowing assembly on the ground before installation.
The earlier method required piece-by-piece installation at height using skylifts. The revised approach reduces labour, time and machinery use, said Seah.
The push for tighter execution extends to capital spending. Part of the group’s IPO proceeds has been allocated for machinery and IT-related hardware and software, with excavators already being acquired following new project wins, including the Sibu Prison and Sarawak Stadium jobs.
As at Jan 31, 2026, RM2.939 million remains earmarked for these purposes.
On funding, Seah said construction firms typically rely on bank-backed project financing, especially for government-linked or large corporate projects.
“As a rule of thumb, a RM100 million project requires about 20 per cent in funding — around 5 per cent for performance guarantees and 15 per cent for working capital,” he said, noting that progressive billing reduces the need for full upfront financing.
Hartanah currently has between RM70 million and RM80 million in unutilised banking facilities, providing capacity to support projects worth RM300 million to RM400 million.
The group’s balance sheet has also strengthened post-listing. It reported cash of RM25.687 million, equity of RM46.321 million and a current ratio of 1.99 times as at Jan 31, 2026.
It remains in a net cash position of RM13.949 million, with net operating cash flow of RM2.812 million recorded in the first quarter of FY2026.
“We have moved into a net cash position after the IPO and project collections, giving us more room to take on new jobs even as cost pressures remain elevated,” Seah added.
