Laying the building blocks for RM10bil market cap

KUALA LUMPUR: Lim Seong Hai Capital Bhd (LSH) is laying the building blocks that would take the group to a market value of RM10 billion within the next five years, as the group prepares to be transferred to the Main Market of Bursa Malaysia.

This seemingly audacious target does not seem to be a dream too far for its executive chairman Tan Sri Lim Keng Cheng. After all, he built the group from a market value of RM46 million when it was listed on the LEAP Market five years ago, into a billion ringgit company.

And Lim claims that he knows how to bring LSH to a market cap of RM10 billion within the next five years. He is doing it now – building up an asset base that encompasses property development and hospitality assets, and two major concession assets.

"Over the next five years, our ambition is to evolve LSH into a larger integrated construction, property and infrastructure group with a stronger recurring-income base, while preserving the financial discipline that has supported our growth so far," said Lim during an exclusive interview with Business Times.

When pressed on the timeline to hit the multi-billion ringgit scale, Lim was optimistic about the pacing. "When we were listed on the LEAP market, I asked my corporate finance team, how many years do we need to get to RM1 billion? 5 years. In 3 years, it will be gigantic," he said.

Rather than utilizing a traditional, capital-heavy model that requires upfront land acquisition, LSH forms strategic joint ventures with landowners, state-owned enterprises, and industry peers to unlock project value.

"This is after the COVID. We start with this model of collaboration and then we work with whichever party and then work out a business model," Lim explained.

This blue ocean strategy has already secured several medium-to-long-term development pipelines.

Key pillars of this expansion include the RM1.91 billion gross development value (GDV) transit-oriented development (TOD) on Railway Assets Corporation (RAC) land in Batu 3, Subang, and the RM850 million GDV Morib coastal rejuvenation project, which involves a 150-acre mixed development and a 60-year lease on the Morib Golf Course alongside a beachfront hotel.

LSH has also secured the nod for the development of the Bandar Malaysia – Seri Kembangan Elevated Expressway (BSE), an 8.2km elevated highway that will cost RM1.75 billion to be developed.

However, expanding at this rate would require debt fundraising. Currently, LSH has a very low gearing level of 0.02 times. As of June 30, 2026, the group held just RM10.75 million in bank borrowings against RM693.35 million in equity and RM57.12 million in cash and deposits.

The first major undertaking that LSH has is the acquisition of the 17.4 acres RAC land in Batu 3. The group will be paying RM197.9 million for the land by the third quarter of 2027. And it will fund the land acquisition cost through debt.

"We are not prioritising equity fund-raising. Given the group's low gearing and balance-sheet headroom, our natural starting point is a combination of internal resources and external debt financing," said LSH in a written answer to Business Times' questions.

This means that over the next few years, LSH will be raising debts to fund its aggressive development and concession pipeline. However, the group is unperturbed by this prospect, as it had planned ahead the needs for capital and manpower.

For the BSE, which is a 50:50 joint venture with Pertama Makmur Sdn Bhd, the capital requirement is shared rather than borne entirely by LSH. The JV company LSH Infra – Pertama Makmur is going to issue RM1.8 billion sukuk to fund the construction of the highway.

The RM750 million share of the sukuk will be bigger than LSH's equity as at June 30, 2026. However, since the BSE project is going to be treated as an associate company, the sukuk will not be consolidated into its balance sheet.

Transforming into infrastructure asset owner, but borrowings a concern

Securing the BSE transforms LSH from a pure-play contractor into an infrastructure asset owner, providing the group with recurring revenue over the next 60 years.

The proposed highway will connect the Salak Interchange on the Setiawangsa-Pantai Expressway (SPE) near Bandar Malaysia to the Sungai Besi Toll Plaza on the North-South Expressway.

LSH Infra – Pertama Makmur JV has secured a 60-year concession for the BSE. The group projected the highway to generate between RM20 billion and RM30 billion in revenue over its lifespan.

"There is going to be a 60-year stable concession revenue... every year, we are going to start with the first year RM20 million (revenue), and then ramp up based on the inflation until the end of the concession," said Lim during the interview.

If the calculation is right, a RM30 billion concession over 60 years could have a gross present value of between RM2.58 billion and RM6.3 billion, before taking into account the operational and maintenance (O&M) costs of the highway.

However, it would not be easy to make money from toll highways.

In Nov 2025, deputy works minister Datuk Seri Ahmad Maslan told the parliament that 12 out of 33 highway concessions are loss-making due to insufficient traffic volume. These include the SPE, of which the BSE will connect to.

The SPE is owned by Ekovest Bhd through Lebuhraya DUKE Fasa 3 Sdn Bhd, and was reported to be constructed at a cost of RM3.74 billion when the concession was signed in 2016.

As of the financial year ended June 3, 2025, Lebuhraya DUKE Fasa 3 has a negative retained earnings of RM527.38 million, accumulated through years of losses.

However, Lim was unperturbed by the prospect of losses at owning a highway concession. He said LSH can build the infrastructure at a much lower cost than its peers and competitors, therefore reducing the funding cost needed.

"We started as contractors and all other activities that we take across the construction value chain, including property development and facilities management, are all to first and foremost ensure that our construction side remains busy," he said.

Lim said the funding for the BSE will be issued at the project level, which would allow LSH to preserve corporate liquidity and borrowing capacity for other projects, including the Batu 3 RAC TOD as well as the Morib coastal rejuvenation.

He added that LSH would leverage its internal construction capabilities to protect margins during BSE's development.

The group intends to integrate design and construction requirements from the outset, allowing temporary works, formwork, falsework, tower cranes, site plants and machinery to be redeployed across projects.

Meanwhile, LSHs building materials business would provide greater procurement visibility and enable the group to retain part of the value generated across the construction supply chain.

Lim said the integrated approach would not eliminate exposure to steel and cement price volatility, but would provide additional levers to manage construction costs.

"The group's building-materials business gives us greater visibility over procurement and allows us to retain part of the value chain internally.

"With a deeper pipeline, utilisation improves, and the effective cost per project comes down.

"It does not directly hedge steel or cement prices, but it helps offset broader cost pressure and protect the overall project margin," Lim said.

The BSE project would therefore provide LSH with two potential earnings streams: construction-related income during development and recurring O&M and concession income once operational.

More broadly, Lim said LSH's ambition was to build a more balanced earnings mix, with infrastructure concessions providing recurring income alongside project-based construction earnings.

"The priority is to deepen our core construction and engineering platform. Construction remains the foundation of the group, but we want to move further into larger infrastructure projects and concession opportunities.

"We want to participate not only during construction, but also across operations and maintenance over the life of the asset," added Lim.

Despite the capital requirements of its RM1.75 billion construction order book and expanding property ventures, LSH is steadfast in maintaining its dividend policy.

"We have undertaken to shareholders a 30% dividend payout from PAT [Profit After Tax] with distributions after each financial results announcement since listing on LEAP and this will remain our intention," the company affirmed, having already declared RM19.62 million (2.34 sen per share) for the first nine-month of the current financial year ending Sept 30, 2026.