Explain super profitability of company doing RM305 million feasibility and design studies for Penang Tunnel project
By DAP Insider
Prompted by Minister Rahman Dahlan’s intriguing questions on the RM6.3 billion Penang Tunnel project, I decided to request the Companies Commission of Malaysia for a copy of the latest shareholding and Profit and Loss statements for the company awarded this concession, Consortium Zenith-BUCG Sdn Bhd (CZBUCG).
These is what I found out.
1. The company only has a total paid up capital of RM8 million for the Financial Year 2014 and RM17.5 million for the Financial Year 2015 – very small for a company awarded to build DAP Penang’s first mega-project of RM6.3 billion.
2. Even though the Penang Government has consistently positioned this as a Malaysia-China equal joint venture, the reality is that the China company only owns 1,000 shares out of 17.5 million shares or just 0.0057% of the shares.
Small local and relatively unknown companies which are recently set-up owns 99.9943% of the shares.
3. The only business of CZBUCG right now is to do the feasibility and design studies which the Penang Govt has generously allocated RM305 million for these studies.
Which is why it is shocking that this company had made a profit of RM61.5 million with revenues of RM51.8 million even though the Penang Govt had said they have only made part payment for the project and the entire studies are yet to be completed.
It looks like doing paperwork is incredibly profitable and fuels the concern of Penang NGOs who are already suspicious of the high cost of RM305 million to do three pieces of paperwork.
4) The profit of RM61.5 million that is higher than the sales revenue of RM51.8 million suggest that there is significant property revaluation involved as it is not possible that the company had no cost at all and had spent nothing on doing the studies.
Please remember that the Penang Government is fully paying for these 3 reports by transferring state land to the company as payment-in-kind.
Rahman Dahlan had revealed Bursa Malaysia documents showing that once the company received the Penang State Land, they had immediately sold it back at much higher prices than what the state government said they were worth.
This abnormally high profitability where the company had booked a Return on Equity (ROE) of almost 800% for one year is more proof of Rahman Dahlan’s expose that the land that the Penang Government paid to the company which they say is worth only RM475 psf is worth twice or three times as much – which explains the high profits that the company had made and why the profit is higher than the revenue.
Unlike a normal concession company where losses are expected from the early years right until they start collecting toll, there appears to be little financial risk for this company as it is already making extraordinary profits even before a single brick has been laid.
If just by paying RM133 million worth of land the company is already making so much, imagine how much this company will be making when the full RM305 million worth of state land has been paid.
Imagine how much they would make when the full RM6.34 billion worth of Penang State land has been paid?
And even when the project is completed, the company will continue to rake in toll collections for 30 years even though the Penang Govt had fully paid for all the construction work.
I believe the DAP Penang State Government has to answer us why this project appears to be extra-profitable for the company when they had said that the RM305 million budget for studies are not overpriced and that the market price of the state land is worth much less than alleged by the NGOs.
