ECM Libra tight-lipped on E&O board move

By Sharen Kaur
sharen@nstp.com.my
Published in NST on September 22 2011
 
Kuala Lumpur: ECM Libra Financial Group Bhd is tight-lipped on why it wants board representation in Eastern & Oriental Bhd (E&O).

On Wednesday, E&O told the stock exchange that ECM had nominated Mahadzir Azizan and Leong Kam Weng to sit on the board of the property developer.

A spokesperson from ECM told Business Times that the management declined to comment on the matter.

On September 30, E&O will be holding its yearly shareholders meeting and at the meeting, four directors are standing for re-election to the board.


The four are Datuk Azizan Abd Rahman, Datuk Tham Ka Hon, Vijeyaratnam V. Thamotharam Pillay and Datuk Henry Chin Poy Wu.

Assuming the ECM nominees are appointed to the board, it will have two representives in the nine-man board.

Speculation in the market place is that the appointments to the board are the first of many moves designed to force Sime Darby's hand in E&O.

Sime Darby emerged as a substantial shareholder in E&O last month after it acquired 30 per cent stake at RM2.30 a share from Tham (12.2 per cent), Tan Sri Wan Azmi Wan Hamzah (9.1 per cent) and G.K. Goh Holdings Ltd (9.5 per cent).

ECM has been buying shares of the Penang property developer recently.

"ECM has been buying shares at low prices in the market. If the MGO (mandatory general offer) happens at RM2.30, ECM will make a handsome profit. But, the question is whether ECM will agree on the price," the analyst said.

Analysts said that E&O minority shareholders are not happy with the Sime Darby deal, which did not trigger an MGO.

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Bandar Raya's asset sale may face shareholder hurdle

By Sharen Kaur
sharen@nstp.com.my
Published in NST on September 21 2011

KUALA LUMPUR: Bandar Raya Developments Bhd (BRDB) may have a tough time convincing minority shareholders to approve a major asset sale as the offer was below book value and it is not using the bulk of the proceeds to replenish land.

On Monday, BRDB agreed to accept a RM914 million offer from major shareholder Ambang Sehati Sdn Bhd to buy four properties from the group. The assets have a book value of RM942 million.

"For BRDB to monetise their assets, it is fine to sell if the price is right or at attractive levels. But we think it might be tough for BRDB to get its minority shareholders to approve the deal," an analyst with OSK Investment Bank told Business Times.

Ambang Sehati is buying CapSquare Retail Centre, Permas Jusco Mall and all of BR Property Holdings Sdn Bhd, which owns Bangsar Shopping Centre (BSC) and Menara BRDB.


Ambang Sehati, which owns 18.8 per cent of BRDB, is controlled by Datuk Mohamed Moiz Jabir Mohamed Ali Moiz, who is chairman of the property firm.

It proposes to pay a preliminary cash payment of RM430 million and assume RM484 million in liabilities related to BSC and Menara BRDB.

Following the proposed disposal, BRDB plans to distribute RM390 million from the assets sale to shareholders via a net cash dividend of 80 sen apiece, and use RM302 million to pare down debt.

AmResearch thinks the money could have been put to better use.

"While the proposed dividends are attractive for minority shareholders, we believe the cash proceeds are better off deployed for landbanking purposes or to fund its future developments, especially when its property development unit has been lacklustre due to delay in launches," it said in a report.

OSK has downgraded BRDB from "buy" to "trading buy" and increased the target price from RM3.06 to RM3.14 effective yesterday, taking into account the special dividend.

AmResearch, meanwhile, is reaffirming its "hold" rating on BRDB with fair value unchanged at RM2.45 a share.

Shares of BRDB fell 14 sen to close at RM2.24 yesterday.

BRDB accepts offer

By Sharen Kaur
sharen@nstp.com.my
Published in NST on September 20 2011

KUALA LUMPUR: Bandar Raya Developments Bhd (BRDB)'s board of directors have accepted an offer from Ambang Sehati Sdn Bhd to acquire some of its assets and liabilities in a deal valued at RM914 million.
Upon completion of the deal, BRDB is also proposing to pay RM390.12 million or 80 sen a share as cash dividend to shareholders, upon receiving the cash from Ambang Sehati.

Early this month, the BRDB board hired CIMB Investment Bank to evaluate the deal.
Ambang Sehati is 26 per cent-controlled by BRDB's chairman Datuk Mohamed Moiz Jabir Mohamed Ali Moiz. Moiz also has an 18.8 per cent stake in BRDB.

"This was an unsolicited offer. We did receive offers from other parties before but there was nothing serious on the table. After weighing the offer from Ambang Sehati against what is happening in the market, we found it a very interesting deal," said BRDB's chief executive officer Datuk Jagan Sabapathy.

Speaking to newsmen after the close of the stock market yesterday, Jagan said the board's decision took into account the advice and opinion of its main adviser CIMB and independent adviser Public Investment Bank Bhd.

Ambang Sehati is proposing to buy the Bangsar Shopping Centre (BSC) and Menara BRDB, which are parked under BRDB's wholly-owned unit BR Property Holdings Sdn Bhd (BRPH), as well as CapSquare Retail Centre in Kuala Lumpur, and Permas Jusco Mall in Johor.

Ambang Sehati will pay RM430 million cash for the deal and take over the term loan from BRPH amounting to RM450 million and other liabilities of the company in the region of RM34 million.

The disposal consideration of BRPH is based on its unaudited RNAV of RM216 million, taking into account the indicative value of RM700 million for BSC and Menara BRDB and the nett liabilities of the company of RM484 million.

The disposal consideration for CapSquare and Permas Jusco Mall are at RM146 million and RM68 million respectively.

Jagan added that the board had not conducted an open tender exercise to dispose of the assets as it may negatively impact the smooth operations of the retail centres.

On how proceeds from the sale will be utilised, Jagan said apart from the RM390 million special dividend payout, BRDB will use RM302 million to pare down debt and RM168 million as working capital.

"This is to finance projects and look for new opportunities or good deals that come along. We will not buy anymore investment assets except land to expand our property development activities," Jagan said.

The investment assets have an average yield of 6 per cent per annum and contribute less than 5 per cent to BRDB's revenue and net profit.

Upon disposal of the assets, BRDB will focus on property development activities long term.

BRDB currently has residential property developments worth about RM6 billion in recognisable gross development value over the next three to five years.
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Depleting landbank may prompt BRDB to sell assets

By Sharen Kaur
sharen@nstp.com.my
Published in NST on September 7 2011


Kuala Lumpur: Bandar Raya Developments Bhd (BRDB) may sell its prime assets to buy more land in the Klang Valley, Penang and Johor as its current landbank is depleting, analysts said.

It may agree on a price of RM1.2 billion, which is about 27 per cent more than their book value.

They said BRDB wants to increase its property development activities to improve earnings, which have been below par lately.

For the quarter ended June 30 2011, BRDB posted a net profit of RM17.1 million, down from RM84 million in the same period last year.


"The stock has been trading below its true value as its earnings have not been as good as expected. Only recently BRDB had been more active in terms of launches," said a senior analyst with MIDF Research.

BRDB, which has four ongoing projects, has less than 25 hectares of land in Bangsar, Dutamas, Seri Kembangan and Taman Duta, and some 124ha of land in Johor.

On Monday, BRDB's major shareholder Ambang Sehati Sdn Bhd, controlled by its chairman Datuk Mohamed Moiz Jabir Mohamed Ali Moiz, had offered to buy some of its assets.

These include The Bangsar Shopping Centre, Menara BRDB, CapSquare Retail Centre in Kuala Lumpur, and Permas Jusco Mall in Johor.

BRDB has, until September 19, to decide on the offer.

The company had appointed CIMB Investment Bank Bhd as its main adviser to evaluate the offer.

"It is obvious that the owner is taking the good assets. He may eventually flip it in a few years to make back his money. Retail assets are very valuable in Malaysia.

"Most of them are trophy properties ... not high value assets except for BSC which is a cash cow for the company," said another analyst.

According to BRDB's 2010 Annual Report, the value for BSC and Menara BRDB is RM660 million while Cap-Square Retail Centre and Permas Jusco Mall are valued at RM214 million and RM68 million, respectively.

OSK Investment Bank Bhd director and head of equity ca-pital markets, Gan Kim Khoon, thinks BRDB will sell the properties and prove to shareholders that they will stand to benefit from the disposal.

"BRDB will make quite a substantial capital gain from the disposal. Otherwise, it won't make sense to dispose of these income-generating assets.

"If BRDB is offered a good deal to sell the assets with substantial capital gain, that may outweigh the loss of future income stream. BRDB can generate income from property development projects," Gan told Business Times.

Glomac: No chance of asset bubble in Malaysia

By Sharen Kaur
sharen@nstp.com.my
Published in NST on September 2 2011
The chief of Glomac Bhd has quashed talks that the local housing market is overheating and will lead to an asset bubble.

Group managing director cum chief executive officer Datuk FD Iskandar FD Mansor Iskandar said prices of properties in Malaysia have not "skyrocketed" as compared with Hong Kong, China and Singapore. The countries have been recording sharp price jumps of 40 per cent to 60 per cent since 2009.

"We are in a highly-regulated industry so it won't be possible to have an asset bubble here," Iskandar said in an interview with Business Times.

He said in general, property prices in the local housing have been increasing by 5 per cent to 10 per cent per year, which he described as healthy.


"Property prices will continue to appreciate as land and raw materials become more expensive," said Iskandar, who is also deputy president of Real Estate and Housing Developers' Association Malaysia (Rehda).

He is confident that Glomac will record strong double-digit growth of 30 per cent in the next two years, led by sales from its current projects.

Glomac has 13 ongoing projects in Kuala Lumpur, Sungai Buloh, Rawang and Johor, with a balance gross development value of RM3.8 billion.

The company's unbilled sales remain high at RM550 million as at April 30 2011.

Iskandar said the RM950 million Glomac Damansara project in Petaling Jaya, Selangor, will contribute significantly to its net profit and revenue.

For fiscal year ended April 30 2011, Glomac chalked up 54.2 per cent gain in net profit to RM63 million, while revenue surged 90 per cent to RM601.5 million.

"The MRT (Mass Rapid Transit) project will instill confidence in buyers and many residential projects are expected to benefit from the implementation," Iskandar said.

Bandar Raya eyes RM4b new projects

By Sharen Kaur
sharen@nstp.com.my
Published in NST on August 31 2011
Bandar Raya Developments Bhd (BRDB), which is upbeat on the property market, plans to introduce five new projects worth more than RM4 billion in the Klang Valley and Johor.

BRDB is looking to increase its work in hand and will venture for the first time into areas such as Seri Kembangan and Taman Duta, its chief marketing officer KC Chong said in an interview with Business Times.

The company has been developing land in Bangsar for 45 years. It currently has a project in Johor called Permas Jaya, and one in Kuala Lumpur known as CapSquare.

Chong said in Seri Kembangan, BRDB plans to launch by the end of this year, the first phase of its RM400 million project at the Bluwater Estate development.

The project comprises 300 units of bungalows, semi-detached and courtyard homes worth more than RM1.5 million each.

BRDB has a 75 per cent stake in the project with Country Heights Land Sdn Bhd holding the rest.

By early next year, BRDB intends to develop the last tract of land it owns in Bukit Bandaraya, Bangsar, in the Medan Serai area to build two 20-storey blocks of 121 units of low-density apartments.

Chong said the units, with sizes of about 4,000 sq ft, will be sold at more than RM4 million each.

"We are bullish on sales since it is the last piece of prime land in Bangsar and everybody wants to be there. We also find that there is demand for homes with this kind of sizes," he added.

Chong said by mid-2012, BRDB will launch phase one of its RM2.3 billion waterfront development in Puteri Harbour, Johor, featuring 80 units of semi-detached homes, townhouses and bungalows.

BRDB has 60 per cent interest in the waterfront development, which it acquired from Limitless Holdings Pte Ltd last year. UEM Land Holdings Bhd owns the remaining 40 per cent stake.

In Taman Duta, the company will launch eight blocks of five-storey luxury resort-style condominiums worth more than RM1 billion. Each unit will be worth more than RM5 million.

"We know we will be able to sell them as we have several offers from local and foreign investors."

BRDB will also launch new phases at Permas Jaya and CapSquare.

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Sime acquiring 30pc stake in E&O for RM766m

By Sharen Kaur
sharen@nstp.com.my
Published in NST on August 30 2011
Sime Darby Bhd, the world's largest listed palm oil producer by acreage, is buying 30 per cent of Eastern & Oriental Bhd (E&O) for RM766 million to expand its portfolio in property development and hospitality, beyond Greater Kuala Lumpur.

At RM2.30 per E&O share, the deal is valued at about a 20 per cent discount to E&O's estimated realisable net asset value (RNAV) of RM3.2 billion.

But it is also 54 per cent more than E&O's closing price of RM1.49 yesterday.

Prior to the announcement, some E&O shareholders have been raising their stakes in the company.

This month alone, Tan Sri Azman Hashim, GKG Investment Holdings Pte Ltd and Datuk Azizan Abd Rahman bought shares in E&O totalling 5.3 million, 1.25 million and 100,000 shares, respectively.

Late last month, E&O deputy managing director Eric Chan told Business Times that the management was not in any acquisition talks with any parties, when asked if some of the shareholders were about to exit the company.

However, E&O issued a statement on the planned disposal by its major shareholders on Sunday.

It said that managing director Datuk Tham Ka Hon and his associates had entered into a share sale agreement with a wholly-owned unit of Sime Darby to sell 108 million shares or 12.2 per cent of E&O, and 38 million units of irredeemable convertible secured loan stocks (ICSLS).

Upon completion, Tham and his associates will continue to hold 29 million E&O stocks and 27.1 million ICSLS. He will end up with 5.1 per cent of E&O if he converts all of his ICSLS.

Sime Darby said in a statement yesterday that it is buying 273 million E&O shares and 60 million ICSLS.

Its president and group chief executive officer Datuk Mohd Bakke Salleh said the proposed acquisition will provide a springboard for the conglomerate to expand its property development activities and the products it could offer, especially in Penang and Johor.

E&O has several projects and the largest is the 392ha Seri Tanjung Pinang seafront development in Penang. It has pockets of land at Jalan Kia Peng and Jalan Yap Kwan Seng in Kuala Lumpur, 145ha at Gertak Sanggul in Penang, and bungalow lots in Damansara Heights.

Sime Darby said Tham will continue to helm E&O and its management team will remain unchanged.

"This would provide continuity in leadership and will ensure effective corporate succession planning," Mohd Bakke said.

In addition to that, both companies have also entered into a three-year collaboration agreement to formalise a framework for their property development businesses.

Mohd Bakke said the potential opportunities for collaboration include the broadening of technical capabilities in innovation and product design, jointly exploring new market opportunities and developing new product offerings.

"E&O is a distinctive brand in the industry and is synonymous with quality. We strongly believe that through collaboration and cross fertilisation of ideas and expertise, there are significant opportunities for synergies for both parties, thus creating value for our stakeholders," he said.

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MRCB eyes more rail jobs

By Sharen Kaur
sharen@nstp.com.my
Published in NST on August 22 2011
Malaysian Resources Corp Bhd (MRCB), which have clinched a couple of contracts related to Ampang and Kelana Jaya light rail transit (LRT) extension projects, will continue to bid for other packages of the LRT extension as well as the mass rapid system (MRT), its chief executive officer Datuk Mohamed Razeek Hussain said.

Last Tuesday, MRCB, through its subsidiary, MRCB Engineering Sdn Bhd (MESB) won a contract worth RM1.33 billion for the Ampang LRT extension from Syarikat Prasarana Negara Bhd (SPNB).

MESB also secured a sub-contract worth RM67.2 million from Sunway Construction Sdn Bhd, for the fabrication and delivery of segmental box girders for the Kelana Jaya LRT extension.

These are the first of a series of major packages awarded under the two LRT extension projects.

According to Razeek, the company will handle the RM1.33 billion job on its own without third party involvement.

"It involves a lot of work but it is not difficult to do. We can manage it on our own," he told Business Times in an interview.

MRCB has experience in han-dling railway matters, thanks to its multibillion-ringgit Kuala Lumpur Sentral and Penang Sentral transportation projects.

"Winning the RM1.33 billion LRT extension contract under the current intense competitive mar-ket is testimony to our capabili-ties and experiences in carrying out major infrastructure projects in the country.

"The award has boosted our construction order book enormously, from the current outstanding works of over RM1 billion to about RM2.6 billion, and is expected to contribute positively to our revenue and earnings growth from fiscal 2012 onwards," he said.

Kenanga Research estimates MRCB's revenue to increase to RM1.16 billion this year and RM1.64 billion next year from the RM1.07 billion in 2010.

It also expects pre-tax profit rising to RM94.6 million and RM181.3 million in 2011 and 2012, respectively, compared with the RM67.3 million posted last year.

MIDF Research, which also expects significant contribution from the contract to kick in next year, has raised its earnings forecast for fiscal 2012 by 29 per cent.

For the RM52 billion MRT project, Razeek said MRCB has been named by SPNB as one of 28 shortlisted individuals and joint-venture companies eligible to bid for va-rious elevated civil works, station and depot packages.

He said out of the 18 work pac-kages, MRCB has been shortlisted for eight packages under elevated civil works.
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Glomac eyes KLIFD deals with UAE partner

By Sharen Kaur
sharen@nstp.com.my
Published in NST on August 20 2011

Glomac Bhd says it may bid for contracts to develop the Kuala Lumpur International Financial District (KLIFD) with its partner, the Al Batha Group.

Glomac and Al Batha, one of the largest private business concerns in the United Arab Emirates, currently have a 51:49 joint venture to develop Glomac Tower in Kuala Lumpur.

Group managing director cum chief executive officer Datuk FD Iskandar FD Mansor said Glomac is also keen to work on Bandar Malaysia, a KLIFD twin development in Sungai Besi, and the 1,335-hectare rubber research institute land in Sungai Buloh.

"We have not submitted any proposals for these projects but would be interested if we are invited," Iskandar said in an interview with Business Times recently.

Meanwhile, Glomac will launch its own projects worth about RM3.8 billion over the next few years, mostly in the Klang Valley.

The company will launch RM1.2 billion worth of projects in its current financial year ending April 30 2012. It has launched half the projects so far.

Iskandar said he is upbeat on the industry outlook, which he anticipates will strengthen with government spending and population increase.

He said the RM52 billion to be spent on the mass rapid system will stimulate the economy.

"The degree of confidence in Malaysia has dropped a little compared with last year but people have money and are spending. The banks are also flush with money.

"Launches in the last two months have been stronger, especially for landed properties. So we are confident of our projects, which mostly are landed residential units in the Klang Valley," he said.

Next month, the company will launch the second phase of its RM450 million Glomac Cyberjaya project.

By early next year it will launch the first phase of its RM400 million project in Bandar Utama, called Glomac Utama, and serviced apartments in Mutiara Damansara, worth RM250 million.

At its ongoing townships in Sungai Buloh and Rawang, Glomac has RM380 million and RM500 million worth of properties to launch respectively, over the next several years.

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