Pansar fortifies foothold in Sarawak

PANSAR Bhd, a company involved in the distribution of engineering equipment and solutions, and the construction industry, is riding on the current strong infrastructure wave in Sarawak.

The Sibu-based company has a construction order book of over RM2bil and a distribution order book of more than RM1bil.

Chief operating officer David Tai Wei says with these, the group has an earnings visibility of up to four years.

Pansar bought construction firm Perbena Emas Sdn Bhd, also a Sarawak company, in April 2021 for RM151mil, paving the way for it to move into the construction industry.

On its own, Pansar is involved in the distribution of more than 2,000 highly specialised equipment and solutions for many industries, including shipbuilding, agriculture, as well as oil and gas perforation.

Ronald Ling, Perbena’s executive general manager, says Pansar’s acquisition of Perbena basically increased the company’s presence in Sarawak.

“With this relationship, we are basically a holdings group that has our pulse on pretty much every industry. That puts us in a unique position where we are able to integrate and implement the Sarawak government’s vision for what it wants it to be,” Ling tells StarBiz 7 in a joint interview with Tai.

Sarawak is undergoing an infrastructure boom, given the higher development expenditure that has been allocated to the state.

“We view that catalytic infrastructure enhancement will take place,” RHB Research says in an earlier report, adding that this is further backed by the state’s post Covid-19 Development Strategy 2030, which aims RM282bil in gross domestic product by 2030.

Among many projects planned, are two giant infrastructure ones – a new international airport and a deep-sea port in Kuching – as part of its goal to become a regional aviation and sea hub.

Some RM100bil is expected to be invested in these two projects over the next five to 10 years.

New business segment

Ling says the government is selective and tends to conduct pre-qualification exercises for big projects.

He says Perbena itself does not just go for any small projects.

“We used to do that and just threw in the price, and our success rate was like 10%. We stopped doing this a few years ago,” he says, adding that most of its jobs are now from the Sarawak government.

“Our success rate is better now because we tender for less. Right now our tender book is around RM1bil.”

Ling says Sarawak has enough of jobs with many companies trying to get in. “If we are trying to get out, then something is wrong with us.”

He says the construction business yields a gross margin of about 7% to 8%, which is the industry average.

As a group, Pansar’s overall gross margin is about 11%, with net margin at 4% to 5%, says Tai.

He says margins for the group’s distribution business depend largely on the product type.

Pansar is looking at adding a maintenance segment for its distribution business as part of its plan to generate recurring income.

“We are looking at this because after a few years, maintenance will be the one obvious thing for our customers. We have started getting some small maintenance contracts.”

Tai says the company just dealt with spare parts for its customers previously, post-selling them the equipment, but now it wants to get serious about making maintenance a significant contributor to group revenue.

“We have about RM30mil in maintenance contracts now. If all goes well, we will see more,” Tai says.

Pansar gets its equipment, machinery and solutions from principals based in Japan, China, the United Kingdom and Germany.

While its construction business gets most of its jobs from the government, Tai says its distribution business is more commercial-driven.

“Unlike construction, this business is not a Sarawak play. We sell to industries everywhere in the world.

“Our distribution business focuses heavily on information technology to keep track of our inventory. Digitalisation is key as we are like a gigantic supermarket with giant items.”

Pansar made a net profit of RM24.3mil on the back of a revenue of RM817.7mil for its nine months ended Dec 31, 2024, against a net profit of RM20.6mil on a revenue of RM808.1mil for the same period, a year earlier.

At last look, the company’s stock was at 53 sen apiece, valuing the entire group at over RM273mil.