Eversendai expected to clinch Azerbaijan deal

By Sharen Kaur
sharen@nstp.com.my
Published in NST on January 30, 2013

EVERSENDAI Corp Bhd is expected to secure a structural steel contract worth more than RM300 million for the world's tallest skyscraper, the US$2 billion (RM6.1 billion) Azerbaijan Tower.

The award of the contract to Eversendai will mark a new mile-stone for the company, which is a leading integrated structural steel turnkey and power plant contrac-tor, according to a TA Research analyst.

The 189-storey tower, which is slated to complete construction in 2018/2019, is a development by Avesta Group of Companies.

Eversendai, founded by Datuk A.K. Nathan, has been involved in the world's tallest buildings a few times, first with Malaysia's sparkling jewels the Petronas Twin Towers (452m) and then with Burj Khalifa in Dubai (629m).
Standing at 1,050m, the Azerbaijan Tower will be constructed on a group of artificial islands (Kazar Islands) in the Caspian Sea, southwest of the Azerbaijan's capital city of Baku.

Kazar Islands will serve as a new hub for commercial and residential purposes and act as a new centre for business and commerce. The floating metropolis is estimated to cost US$100 billion to develop.

The Azerbaijan Tower, upon completion, will tower over Dubai's Burj Khalifa by a staggering 220m, and Saudi Arabia's Kingdom Tower by 50m.

If Eversendai is awarded the contract for the Azerbaijan Tower , it will be the second win for the company this year and its current order book will hit the RM2 billion mark.

Early this month, Eversendai won a RM325 million contract to undertake structural steel works at the Abu Dhabi International Airport.

Analysts have upgraded the company as they see further upside to the stock, looking at its earnings visibility and ventures into oil and gas support services, and potential contracts in the Middle East and India.

Kenanga Research has upgraded its recommendation for Eversendai's shares from a "market perform" to an "outperform" with an unchanged target price of RM1.44.

Another research house has retained a "buy" call on Eversendai's shares, with an unchanged target price of RM1.78.

Domestically, Eversendai is expected to secure a few contracts for projects like the Refinery and Petrochemical Integrated Development (Rapid) project by Petronas, Warisan Merdeka tower and several coal-fired plants, that could easily be worth over RM1 billion for the company.

Eversendai, which is 70.52 per cent-owned by Nathan and 8.85 per cent by the Employees Provident Fund, posted pre-tax profit of RM90.8 million on revenue of RM746.9 million for the nine months ended September 30, 2012.

RM1b Harrods Hotel KL to open its doors in 2018

By Sharen Kaur
sharen@nstp.com.my
Published in NST on January 30, 2013

SEVEN-STAR: It will have more than 30 floors and feature 250 to 300 rooms\

TRADEWINDS Corp Bhd and Qatar Holding LLC will jointly develop the world's first Harrods Hotel in Malaysia, which is estimated to cost around RM1 billion.

Qatar Holding, which owns Harrods Group, also has on the drawing board to build Harrods Hotels in London and Italy.

The seven-star Harrods Hotel Kuala Lumpur, which will have more than 30 floors, will feature 250 to 300 hotel rooms and several floors for serviced apartments and retail space.

Two other luxury hotels under construction or being planned in Kuala Lumpur are St Regis at KL Sentral and the 65-storey Four Seasons Place near the Kuala Lumpur City Centre.

It is understood that the cost to build each Harrods Hotel room is RM2.5 million to RM4 million, depending on the size and finishing.

A six-star hotel room costs an average RM2.5 million to build and for five-star hotel rooms, it will cost about RM1.5 million to RM2 million each.

Qatar Holding vice-chairman Dr Hussain Ali Al-Abdulla said there will be a minimum of 200 rooms and the hotel will be ready in 2018.

The hotel will be owned and operated by Harrods Hotel Management Co, Hussain said.

"I can't reveal the project cost as we are calling for tenders in the third or fourth quarter of this year. We don't want bidders marking up the price," he said.


Hussain was speaking here yesterday, at the hotel's ground-breaking ceremony in Jalan Conlay. Also present was Federal Territories and Urban Wellbeing Minister Datuk Raja Nong Chik Raja Zainal Abidin.

In July last year, Qatar Holding and Jerantas Sdn Bhd signed a memorandum of understanding (MOU) to develop the hotel.

Jerantas is a joint-venture between PS Trading Sdn Bhd (34 per cent), which is owned by Tradewinds and Gagasan Simfoni Sdn Bhd (66 per cent).

Gagasan Simfoni is a 51:49 joint venture company set up by Pavillion Group and controlled by Malton Bhd's Datuk Desmond Lim, among others, and Qatar Holding, owned by Qatar's sovereign wealth fund.

Harrods Hotel forms part of an integrated development that will feature two serviced residences, an office block and a 400,000 sq ft retail mall.

The entire development will be undertaken by Jerantas on a 2.2ha site currently housing Chulan Square and Sri Melayu Restaurant. The land was acquired by Jerantas from the government for RM1,800 per sq ft, or RM429.68 million.

Hussain said at the (MOU) signing ceremony that the cost to develop the hotel and the integrated development is about RM2 billion.

He said the hotel component will feature up to 300 hotel rooms, apartments and retail space.

On the pricing of the serviced apartments, he added that it would be higher than Banyan Tree Residences.

The last transacted price for the Banyan Tree was RM2,800 per sq ft.

Business Times understands that the retail mall will be injected into the Pavilion Real Estate Investment Trusts (Pavilion REIT) once it is ready in 2018.

Qatar Holding and Lim are major unit holders of Pavilion REIT.

Qatar Holding plans to invest in Pengerang

By Sharen Kaur
sharen@nstp.com.my
Published in NST on January 30, 2013

Qatar Holding LLC, a unit of the Gulf nation's sovereign wealth fund, plans to invest over US$10 billion in various projects here, including the Pengerang Integrated Petroleum Complex (PIPC) development in Johor, over the next five years.

Vice-chairman Dr Hussain Ali Al-Abdulla said Qatar Holding is eyeing mainly petrochemical projects and its investments in the sector will exceed US$5 billion.

He added that Qatar Holding also plans to invest over US$5 billion in real estate development, hotel chain expansion and other industries, including banking, in Malaysia.

The 8,100-hectare PIPC will house oil refineries, naphtha crackers, petrochemical plants as well as a liquefied natural gas import terminal and a regassification plant.

"We are in talks with major companies in Kuala Lumpur to jointly invest in petrochemical projects here. We see huge potential in Johor, not just for petrochemical but also in other sectors," he said at the ground-breaking ceremony for The Harrods Hotel development here yesterday.

The hotel, the first such hotel in Asia, is a joint investment project between Qatar Holding, which owns the world's famous Harrods brand, and property developer Jerantas Sdn Bhd.

The cash-rich Doha-based fund is not new to Malaysia. Last year, it became a cornerstone investor in state-owned plantation firm Felda Global Ventures Holdings Bhd (FGV).

FGV raised RM9.93 billion last year by selling shares on Bursa Malaysia in the world's second-largest initial public offering.

Qatar Holding is part of the Qatar Investment Authority, which is the largest shareholder in the J Sainsbury plc grocery chain in the UK.

The sovereign wealth fund has been the UK's most active investor in recent years, deploying the Gulf nation's plentiful natural gas riches in assets ranging from German sports carmaker Porsche to British bank Barclays.

Qatar Investment, through its unit Qatari Diar Real Estate Investment Co, is also the owner of the former Royal Dutch Shell plc headquarters in London. It recently bought the athletes' village at the London 2012 Olympic site for STG557 million (RM2.7 billion) in a joint venture with Delancey Estates plc.

In 2008, Qatari Diar purchased the Chelsea Barracks in west London, in a joint venture with Christian Candy's CPC Group Ltd. Two years later, Qatari Diar bought out CPC's share of the project.

Magna Prima upbeat on project

By Sharen Kaur

Published in NST on January 29, 2013

MAGNA Prima Bhd will be launching 345 serviced apartments at its RM625 million Boulevard Business Park in Jalan Kuching, Kuala Lumpur, after the Chinese New Year.

The two- and three-bedroom units will be priced at between RM405,000 and RM713,000, or about RM500 per square feet, said its chief executive officer Datuk Rahadian Mahmud Mohammad Khalil.

Rahadian is optimistic about the take-up rate after garnering positive sales for the shop office blocks.

The freehold Boulevard integrated commercial development comprises 90 units of four-storey shop office blocks, a 33-storey serviced apartment tower and a 120,000 sq ft retail mall.
The shop offices, launched in early 2012, are 80 per cent sold.

Rahadian told Business Times that the intermediate blocks were sold for RM3.4 million on average while the corner units fetched more than RM4 million each.

He said the majority of the blocks were purchased by owner occupiers.

As part of a larger plan to enhance the project, Rahadian said Magna Prima will be setting aside 100,000 sq ft at the lower ground floor, which will be leased to a major hypermarket operator.

"I have no doubt the residential component will do well, too. The key points are the pricing, location and contents of the project. The public is attracted to mixed properties.

"The residential tower, with its modern facade, is designed so that each unit can enjoy maximum panoramic views. Some 15 per cent of the units have been sold prior to the launching," Rahadian said.

On the retail component, Rahadian said Magna Prima plans to retain it for recurring income.

"It is part of the company's strategy to retain assets for recurring income. The mall is the first such asset and we are looking at more developments," he said.

Rahadian said the project will set a new benchmark in pricing and change the landscape of Jalan Kuching once it is completed by the end of 2015.

Meanwhile, Magna Prima will be launching new projects in the second quarter of this year worth more than RM1.5 billion.

In Section 16, Shah Alam, Magna Prima will launch a RM1.4 billion mixed development comprising shop offices, a 500,000 sq ft mall and residences.

At Sunway Mentari, it will launch 36 units of shoplots worth a combined RM68 million.

At Section 5 in Petaling Jaya, Magna Prima plans to build a temporary lifestyle commercial centre.

"We are still planning the product offering for the commercial centre to complement the lifestyle of the residents in the area," Rahadian said.

Four Seasons Place KL poised for take-off

By Sharen Kaur
Published in NST on January 29,2013

THE 65-storey Four Seasons Place Kuala Lumpur, estimated to be worth about RM3 billion, will take off this year, after over four years of delay.

The project will be launched tomorrow by Prime Minister Datuk Seri Najib Razak.

Four Seasons Place, which will be the first in Southeast Asia and third in the world, is designed to complement the Petronas Twin Towers.

It will feature hotel rooms, luxury residences and retail. The product planning took four years.

It is understood that project owner and developer Venus Assets Sdn Bhd may sell the condominium units at more than RM3,000 per sq ft (psf) and the hotel rooms from RM900 per night, setting a new benchmark in pricing within the vicinity.

Venus Assets is controlled by Ipoh-born tycoon Ong Beng Seng, Tan Sri Syed Yusof Syed Nasir and the Sultan of Selangor, Sultan Sharafuddin Idris Shah.

The Sultan and Syed Yusof are close associates of Ong, who owns Four Seasons resorts in Bali, Singapore and the Maldives.

News of a Four Seasons being developed here by the two tycoons and the Sultan surfaced in 2005.

The project was due to launch in 2007, but postponed because of the global financial meltdown and other setbacks.

Venus Assets then considered launching the project in 2008. The project was to comprise a 72-storey condominium block, later reduced to 60 and a 38-storey hotel building.

The condominium block was to be a joint project between Venus Assets and KLCC Holdings Bhd, developed on a 0.64ha site adjacent to Menara Maxis and owned by KLCC Holdings.

The hotel building was to be built on a 1.04ha site which Venus Assets acquired for RM90 million in 2003, from the estate of the late Khoo Teck Puat, a former shareholder of Standard Chartered plc.

Due to unforeseen circumstances, the plan was aborted. Instead, Venus Assets decided to build a 65-storey tower featuring condominium and hotel units at the 1.04ha site.

Piling works for the project, sandwiched between Menara Maxis and Wisma Central, was completed.

The tower was to house 240 hotel rooms, 150 condominium units, six levels of parking and four retail floors, built over four years.

At that time, Venus Assets was looking at selling the condominium units at about RM3,000 psf and the hotel rooms from RM750 per night.

But because of worsening economic conditions, the project was postponed again.

Business Times reported that Venus Assets was considering launching the project at the end of 2009, and then in 2010, but that didn't take off either.

"The plans have changed. We had to fine tune the development plan to meet changing consumer trends. It's going to be an iconic tower and it will change the city skyline," said a source familiar with the plan.

"We have been approached by several fund management companies who want to buy the building en bloc. The shareholders of Venus Assets are keeping their options open," he told Business Times.

Magna Prima's RM1.8b venture

By Sharen Kaur
Published in NST on January 28, 2013

Magna Prima Bhd will be developing a RM1.8 billion luxury property at a 1.05ha site in Jalan Ampang that is now Lai Meng Primary School and Lai Meng Kindergarten.

   

Chief operating officer Datuk Rahadian Mahmud Mohammad Khalil said the project, which comprises two luxury towers, is slated for launch next year after the new Lai Meng school in Bukit Jalil is completed in the third quarter of this year.

He said Magna Prima is preparing the building and layout plans for the new project.

The first tower will be a Grade A green office building and the company is in talks on selling it to local fund management companies.

The second tower will comprise a mix of luxury serviced apartments, a five-star hotel and offices.

"The lower levels will be the offices while the upper floors will comprise hotel rooms. We plan to submit the building plans within the next couple of months," Rahadian told Business Times.

Rahadian, however, said Magna Prima is in no hurry to unlock the value of the land, which has doubled since its acquisition.

"The land is now worth about RM300 million and the value is
still increasing. The longer we keep it, the higher the value.

At the end of the day, our shareholders will benefit," he said.

He said the group has several sizeable on-going projects that will keep it busy.

"The new Lai Meng school will be ready this year. When the school moves, we will take possession of the site," he said.

Magna Prima bought the land from the Lai Meng Girls School Association for RM148.2 million in March 2010, in exchange for a piece of 2.2ha land at Bukit Jalil.

The company bought the 2.2ha land from Santari Sdn Bhd in Bukit Jalil for RM10.7 million. It is building the school at its own cost, which is believed to be between RM20 million and RM30 million.

The twin tower project will be Magna Prima's single largest development to date and its second project in the Kuala Lumpur city centre area.

The first was the RM300 million 41-storey The Avare condominium in Jalan Stonor, launched in 2005.

The Avare offered 78 units with sizes ranging from 3,8 sq ft 00 to 7,696 sq ft. The last transacted price was RM2,100 per square feet (psf) in the fourth quarter of 2007, an increase of almost 50 per cent from the launch price of RM1,350 psf.

Rahadian believes the Jalan Ampang project will set a new benchmark in pricing.

Mudajaya's Myanmar power plant job set for 2014 takeoff

By Sharen Kaur
Published in NST on January 22, 2013

US$750m PROJECT IN MYANMAR: Mandalay region to receive up to 500MW under phase one, sources say


POWER plant and highway construction specialist Mudajaya Group Bhd will start developing phase one of its for US$750 million (RM2.3 billion) coal-fired power plant project in Myanmar in the second half of next year.

It is understood that the special purpose vehicle (SPV) set up by Mudajaya and IJM Corp Bhd co-founder Datuk Koon Yew Yin will build the plant over several phases.

Phase one will supply up to 500 megawatts (MW) of electricity to the Mandalay region, sources said.

"Myanmar has an open market policy and the government has not limit as to how big we can build the plant. Depending on fuel supply and use, the plant could get bigger," a source said.

Mudajaya has a 70 per cent stake in the SPV while Koon holds the rest. Both parties last year inked a memorandum of understanding with the Mandalay government to set up two independent power plants in the Mandalay region and other suitable areas.

The first is a coal-fired plant and the second will be a solar-powered plant.

"For now, the focus is to build the coal-fired plant to meet the urgent power requirement. The feasibility study on the project started earlier this month and will be completed within 12 months.

"After the study is completed, the SPV will work on getting the power purchase agreement signed and the financial closure. The plant will be built in phases because of the market risk there," the source said.

Another source said Mudajaya is working out a financial structure for the project.

Mudajaya group managing director and chief executive officer Anto Joseph was not immediately available for comment.

For the nine months ended September 30 2012, Mudajaya's profits rose to RM189.9 million from RM164.5 million a year earlier.

Its revenue increased by 47.5 per cent year-on-year to RM1.35 billion, compared with RM916.4 million previously.

Mudajaya's balance sheet remained healthy with a net cash position of RM419.5 million, shareholders funds of RM1.09 billion and net asset per share at RM2.

The improved performance was driven by its construction division on the back of higher recognition of revenue and profits on work done.

Mudajaya is now bidding for projects worth more than RM5 billion in Malaysia.

Its construction order book as at September 30 2012 stood at RM2.8 billion.

Khazanah:Keen on more tie-ups with the private sector

By Sharen Kaur
Published in NST on January 18, 2013

KUALA LUMPUR: Khazanah Nasional Bhd said it will look at new collaborations between its subsidiary companies and the private sector to form larger entities like the UEM-Sunrise deal, in a bid to enlarge its portfolio.

In 2010, UEM Land Holdings Bhd, in which Khazanah holds 65 per cent stake, took over Sunrise Bhd for RM1.4 billion, creating Malaysia's largest property company with a market capitalisation of nearly RM10 billion and a 4,800-hectare landbank.

Managing director Tan Sri Azman Mokhtar added that Khazanah, through its subsidiaries in diversified sectors, will also continue to invest in privatisation projects and concessions which are viable.

He said Khazanah, the government investment arm, is eyeing several investment deals, but added that it was premature to comment on the matter.

On whether its infrastructure and construction outfit UEM Group Bhd is buying highway operators Sistem Penyuraian Trafik KL Barat Holdings Sdn Bhd (Sprint) and Lingkaran Trans Kota Holdings Bhd (Litrak), Azman said he could not comment on the matter at it was at a different level.

Business Times reported on Wednesday that Gamuda Bhd is in talks to sell its stakes in Sprint and Litrak for more than RM4 billion to a government-linked special purpose vehicle. Speculation is rife that UEM Group could be the potential buyer.

"Our investment style is we are not shy. If we have to do deals, we will do deals," Azman said yesterday at a media briefing on its financial and strategic performance for 2012 and outlook this year.

He said the primary drivers to the strong portfolio performance last year were strong delivery of projects in Iskandar Malaysia, and the initial public offerings of IHH Healthcare Bhd and Astro Malaysia Holdings Bhd.

Meanwhile, Azman said the UEM investment in Turkey is expected to be a significant "needle mover" towards its bottom line.

Last December, a consortium comprising UEM Group, Koc Holding and Gozde Girisim Sermayesi Yatirim Ortaklig won the bid to privatise bridges and highways across Turkey for US$5.7 billion (RM17 billion).

"We are quite excited about this venture. It is a brownfield project, it is profitable and it is working. We also expect more growth in Iskandar Malaysia, having reached the tipping point last year," he said.

Phase 2 of Battersea to be launched by year end

By Sharen Kaur
Published in NST on January 14, 2013

KUALA LUMPUR: Battersea Project Holding Co Ltd (BPHCL) aims to launch phase two of the STG8 billion Battersea Power Station redevelopment in London, featuring properties worth not more than RM4 billion, by the end of this year.

Battersea Power Station is a decommissioned coal-fired power station located on the south bank of the River Thames, in Battersea, an inner-city district of South West London. It comprises two individual power stations, built in the 1930s, and which were decommissioned in the 1980s.

It was reported that renovation will began soon on the power station, costing around STG60 million.

Phase two will comprise 300 luxury residences which will be built on the roof top of the power station, food and beverage outlets, as well as retail and leisure units, said BPHCL chairman Tan Sri Liew Kee Sin.

"We hope to launch phase two this year, but will look at the timing because the longer we hold them, the greater the value. We expect demand to exceed our phase one supply," said Liew, who is also president and chief executive of SP Setia Bhd.

BPHCL is 40 per cent owned by SP Setia and Sime Darby Bhd respectively, and 20 per cent by the Employees Provident Fund (EPF).

The London-based company is the project owner of the Battersea Power Station redevelopment, which is the largest Malaysian property development outside the country.

SP Setia, Sime Darby and EPF bought the 15.8ha Battersea Power Station site for RM1.99 billion in September last year. The project will be developed in eight phases over the next 14 to 15 years.

Phase One of the project, named Circus West, was launched last Thursday in London and in Kuala Lumpur on Saturday.

Circus West comprises 800 units of apartments as well as offices, retail shops and restaurants across eight buildings, worth a total of STG1 billion.

According to Liew, BPHCL has allocated 200-odd units for sale in London, 400 in Malaysia and the rest for Singapore and Hong Kong.

"You won't go wrong investing in London. If you look at the world economy, London is very vibrant. It is a good opportunity for Malaysians and people around the world to buy the apartments for their children' s education," Liew said at the launch.

Circus West was launched by Minister of Housing and Local Government Datuk Seri Chor Chee Heung at the Setia International Centre here.

The studio, one-, two- and three-bedroom apartments and penthouses are priced from STG338,000, STG423,000, STG613,000, STG894,000 and STG6 million respectively.

"We are targeting to sell all the units by April this year," Liew said.

He said construction will commence in the second half of this year and buyers will be able to occupy their units in 2016.

Battersea project to be used as investment platform in Europe

By Sharen Kaur
Published in NST on January 14, 2014

KUALA LUMPUR: SP Setia president and chief executive officer, Tan Sri Liew Kee Sin says the STG8 billion Battersea Power Station redevelopment in London will be used as a vehicle by its three owners to invest in other parts of Europe, including Great Britain.

"It is not easy for three giants to work together, but we will make sure our objectives are achieved, not just in terms of improving our bottomline, but to use it as a vehicle to invest in other parts of Europe, including London," Liew said.

SP Setia and Sime Darby said profits from the Battersea Power Station redevelopment will be recognised in fiscal year 2016, as the companies employ the completion method of accounting for profit.

"The accounting system is different in London where we can only recognise profits from the sale of properties, after handing them over to buyers upon completion," Liew said at the launch of Phase One of the project here on Saturday.
Battersea Project Holding is targeting to sell all the units by April this year. Construction will commence in the second half of this year and the units will be ready and handed over to buyers in 2016.

Liew said Battersea Project Holding has secured funding for the entire project but he declined to elaborate further.

"We have the funding structure in place. The UK government has also offered a STG1 billion loan and guarantee to extend the Northern Line and build an underground tube right up to Phase One. This will further add value to the project," Liew said.

Sime Darby Property managing director and chairman of the executive committee, Battersea Project Holding, Datuk Abd Wahab Maskan is bullish on the project.

He added that although profits will be recognised in 2016, sales and expenditure from the project will be accounted for, starting this year.

"Sime Darby and SP Setia have been working hard to get this historic project off the ground quickly. We are happy with the pace of the progress so far, which demonstrates the strong capabilities of both our UK and Malaysian team," he said.

Employees Provident Fund (EPF) chief executive Tan Sri Azlan Zainol is confident that the joint venture will deliver results with the successful launch of the project within four months after completing the acquisition of the site.

"At EPF, we are always on the lookout for good investment opportunities in the interest of our members' retirement well-being," he said.

Pensonic seeks investors for Penang project

By Sharen Kaur
Published in NST on January 14, 2013

KUALA LUMPUR: Pensonic Holdings Bhd is talking to several investors, including sovereign fund partners, to help finance a portion of the 2.4ha manufacturing hub and international distribution centre in Bukit Minyak, Penang.

The Penang-based manufacturer is building a new operational headquarters with research and development (R&D) facilities and training centre at the hub for electrical home appliances industries.

Pensonic is expected to invest up to RM250 million between 2010 and 2020 for the project, where the majority would be internally funded, an official told Business Times.

The project started in July last year which includes constructing a four-storey semi-green building for the R&D facilities.
According to the official, the project is 17 per cent completed and it is expected to be fully operational by early next year.

"Pensonic is looking for investors to fund its R&D activities and product innovation. It has hired R&D specialist from Taiwan and France," the official said.

The development of the hub is being aided by the government as an entry point project under the Economic Transformation Programme to spearhead the country's electrical home appliances segment.

Several incentives were offered to Pensonic, such as corporate tax exemptions and a variety of subsidies for the project.

"Other benefits include an increase in trade opportunities. Pensonic will utilise all the given opportunities to lift the company's profile to a new height," said company officials.

The project is important as it would help position Malaysia as a world player in the electrical home appliances segment.

Through the hub, Pensonic is targeting to capture the huge potential in Southeast Asia and the Middle East.

It is expected to provide an incremental gross national income of RM500 million starting this year.

Pensonic, the biggest domestic electrical home appliances player with valuation of more than RM300 million, expects the project to contribute positively to its earnings from next year.

For its current financial year ending May 31 2013, it has forecast a jump of nine per cent in sales revenue to RM380 million and RM8 million net profit in the region.

Pensonic, unfazed by global uncertainties, is targeting higher earnings in fiscal 2014 through aggressive marketing and distribution strategies in local and international markets.

It is also planning to sell a wide range of new products, such as LED lighting to overseas markets.

Scomi eyes more monorail deals

By Sharen Kaur
Published in NST on January 14, 2013

FANTASTIC PROSPECTS: Group hopes to clinch one third of US$45b worth of new projects in Asia, South America

SCOMI Engineering Bhd aims to secure one third of the US$45 billion (RM137.2 billion) worth of new monorail projects that will be implemented in Asia and South America over the next five years.

"There are three major monorail providers worldwide. If you divide the amount equally, each would get more than US$10 billion worth of jobs. The prospects going forward is going to be fantastic," Scomi group chief operating officer of transport solutions Kanesan Veluppillai told Business Times in an interview.

In India, the value of new monorail projects is around US$25 billion and US$15 billion in Brazil. Pipeline monorail projects in Taiwan, Indonesia and Thailand make up about US$10 billion, Kanesan said.

Kanesan said the Indonesian government plans to tender three new monorail lines in Jakarta next year, worth RM3 billion to RM4 billion.

In Bangkok, the government plans to tender the Pink Line (east west line) involving 35km, and valued at about RM4 billion.

"In Brazil, there is another line in Sao Paulo, involving 15km that will be on tender next year. The project is worth about RM2 billion. The work that we are eyeing is valued about RM400 million as the rest will be localised there," he said.

In the last four years Scomi won three of the seven monorail projects tendered worldwide. With its Indian partner Larsen and Toubro Ltd, it won the Mumbai monorail project in 2008. Last year, it won two jobs in Brazil worth a combined RM5.6 billion.

"We would like to see ourselves going into heavier rail. This includes long distance railway, bullet train and intercity. We plan to also establish Scomi in the mass rapid transit (MRT) project," Kanesan said.

For the proposed high-speed rail (HSR), Kanesan said Scomi plans to participate in the project by way of transfer of technology.

Scomi is in the business of providing buses, special purpose vehicles and monorail coaches, and currently also offers support services for the light rail transit line.

The group has an engineering, technology and innovation plant in Rawang, sprawled over six hectares, which is capable of producing around 500 monorail cars a year.

The plant, which has a test track facility, is currently manufacturing 12 sets of four-car Generation 2-type trains for the KL Monorail fleet expansion, in addition to monorail cars for the project in India.

"We are focusing on technology, research and development using the strength of our human capital. We are extending our services to do maintenance, refurbishment and overhaul of trains, and project management, as a form of recurring income," he said.

Iskandar Investment to launch catalytic projects

By Sharen Kaur
Published in NST on January 12, 2013

ISKANDAR Investment Bhd is intensifying its investments in Iskandar Malaysia in Johor to make it an international metropolis and to be one of the world's most livable cities.

Iskandar Investment plans to do this by introducing new catalytic projects for sustainable growth.

President and chief executive officer Datuk Syed Mohamed Syed Ibrahim said the aim is to make Iskandar Malaysia a metropolis of international standing, comparable to London, New York, Auckland and Singapore. It also plans to turn the region into one of the world's top 10 most livable cities.

Based on the strategic roadmap, 2012 is the tipping point for Iskandar Malaysia and it has achieved the level as most of the catalytic projects planned since 2006 have been recently completed.

"A livable city means having a good mix of community, leisure, education, healthcare, entertainment, art, quality, security, broadband connectivity and public transport. We knew what the gaps were and came up with the roadmap to bridge the gap.

"The roadmap has all these components that we need to do to achieve the vision of Iskandar Malaysia in becoming a metropolis of international standing," Syed Mohamed said in an interview.

He added that investments by the Federal government to build new infrastructure and develop catalytic projects have supported the current situation in Iskandar Malaysia, which is buzzing with activities.

"Perhaps, we shouldn't have been too cautiously optimistic in developing Iskandar Malaysia. We should have built more five-star hotels. We have shortage of rooms now in Johor," Syed Mohamed said.

He said despite the global financial crisis, there is still a lot of vested interest in Iskandar Malaysia.

"We have secured investors or investments from the Far East, including Japan, China and South Korea. There are more investors in the Iskandar region today as they see the upside and potential. Those early birds are laughing their way to the banks," Syed Mohamed said.

He said several European companies have asked Iskandar Investment if it intends to attract investors from Europe.

"We will be cautious and realistic with new investments pouring into the region to make sure that they benefit from putting their money there.

"We have learnt the lesson from places in other parts of the world, which were considered hot spots. There was phenomenal growth, which was creating an artificial situation. The demand was not real, but created by speculators," Syed Mohamed noted.

He said Iskandar Investment wants to ensure that demand in Iskandar Malaysia is "real".

"Growth should not be fuelled by pure speculation. We want the region to remain a healthy investment destination," Syed Mohamed added.

Property prices in some well-planned housing projects are now hovering around RM700-RM800 per square feet (psf) in Iskandar Malaysia, from RM300 psf in two to three years ago, especially in the Nusajaya area.

Sunway REIT rules out dual listing

By Sharen Kaur

Published in NST on January 12, 2013

Sunway REIT will consider opportunities for mergers and acquisitions to form another REIT.

KUALA LUMPUR: Sunway REIT, Malaysia's largest real estate investment trust (REIT), will consider opportunities for mergers and acquisitions (M&As) to form another REIT.

"We may consider an M&A, but we have no intention for a dual listing (of Sunway REIT) at this juncture," Sunway REIT Management Sdn Bhd chief executive officer Datuk Jeffrey Ng told Business Times.

Speculation has been rife that Sunway REIT is seeking a dual listing in Singapore, after its total assets under management surpassed RM4 billion.

Its assets will reach RM4.95 billion with the acquisition of Sunway Medical Centre (SMC) by end-December 2012. 

On how Sunway REIT plans to remain attractive to investors, Ng said the focus will be on organic, inorganic and turnaround growth, translating into higher dividend per unit growth to unitholders.

Organic growth will be achieved through asset enhancement and asset management initiatives such as rental reversion, conversion of common areas into lettable area, space reconfiguration, as well as planned and ongoing refurbishments, Ng said. 

Inorganic growth refers to acquisitions leading to new income stream, while turnaround growth is presented to Sunway REIT by virtue of its acquisition of Sunway Putra Place in 2011.

Ng is bullish on growth in the Malaysian Real Estate Investment Trusts (M-REITs), underpinned by several factors including the entry of new REITs.

The growth of M-REITs in the last two years has enhanced the visibility and prominence of M-REITs among international investors, he said. 

From a relatively small and unknown market in Asia, M-REITs are now ranked fourth by market capitalisation in Asia after Japan, Singapore and Hong Kong. In Southeast Asia, M-REITs are ranked second (by market cap) after Singapore. 

The prevailing accommodative interest rate environment presents M-REITs the opportunities to enjoy a period of low cost of debt regime. 

He said REITs may exploit such opportunity to restructure their existing loans to reflect the prevailing low interest rate regime.

LBS Bina plansto pursue new ventures in China

By Sharen Kaur
sharen@nstp.com.my
Published in NST on January 10, 2013

ALKS IN FINAL STAGES: Company plans new projects through Hong Kong-listed Jiuzhou Development

LBS Bina Group Bhd is not pulling out of China and instead will have new ventures to look at in the region through Hong Kong-listed Jiuzhou Development Co Ltd (JDCL).

State-owned JDCL is involved in various businesses like high-speed passenger ferry operations, running a marine passenger transport pier, theme parks and a hotel chain in China.

LBS is expected to become a substantial shareholder of JDCL after selling its wholly-owned unit, Dragon Hill Corp Ltd, to Jiuzhou Technology Co Ltd, a subsidiary of the Hong Kong group.

It is understood that LBS will be involved in the planning of projects by JDCL and have board representation in the group.

LBS is a Malaysian property developer with focus in the Klang Valley and Johor.

It has 60 per cent interest in Dragon Hill, which owns and operates the 36-hole Lakewood Golf Club, and an adjoining 79.19ha property development project in Zhuhai City.

The company inked a memorandum of understanding (MoU) in April last year to sell its share in Dragon Hill to Jiuzhou Technology.

The Chinese company intends to buy 60 per cent to 100 per cent equity in Dragon Hill for HK$1.65 billion (RM646.65 million) in cash and equity in JDCL and convertible bonds.

This means LBS, which is 49.94 per cent controlled by Datuk Lim Hock San and his family, will own a portion of JDCL.

When met yesterday at the unveiling of BSP Skypark here, Lim said negotiations are in final stages and he expects to conclude the deal in the current quarter.

"Our 60 per cent rights (in Dragon Hill) can be measured ... it is already quantified. We hope to sign the sale and purchase agreement in the current quarter or before April," Lim told Business Times.

LBS and Jiuzhou Technology have six months to negotiate the terms of the agreement and sign it on or before it expires in April.

BSP Skypark, meanwhile, is LBS' maiden high-rise development here, a township which started in 2003.

It comprises 689 units of serviced apartments and 32 shoplots in a 24-storey tower, worth RM320 million.

LBS is selling the apartments from RM399,900 (around RM400 per sq ft) to above RM800,000, and the shoplots from RM618,000 (1,030 sq ft).

"We are bullish on sales as this is the first high-rise residence in the township and the units are affordable," Lim told reporters.

Lim said LBS will be launching new phases in the township which accounted for 60 per cent of its RM871 million sales last year.

LBS has 19 ongoing projects and 887ha of undeveloped land in Ipoh, Batu Pahat, Cameron Highlands and Bandar Saujana Putra, which could generate RM12.5 billion in gross development value.

Paramount weighs options

By Sharen Kaur
sharen@nstp.com.my
Published in NST on January 9, 2013

PARAMOUNT Corp Bhd will explore financing options from the capital markets for Paramount Utropolis, its RM800 million integrated development in Shah Alam.

Executive deputy chairman Datuk Teo Ching Quan expects to finalise the financing structure for the project by the end of this month.

"We are looking at a combination of banks and capital markets," he said yesterday, at the unveiling of Paramount Utropolis.

Paramount's cash level stood at RM206.2 million, and it has RM672 million in its shareholders fund, as at December 31 2011.
For the year under review, it posted a pre-tax profit of RM110.4 million on revenues of RM473.8 million.

The property development and education-focus company has about 320ha in its pocket, with potential to generate some RM8 billion in gross development value (GDV) over the next eight years.

A major part of the landbank is located in Sg Petani, Kedah, and the rest in Klang Valley.

Paramount Utropolis will be developed in three phases over the next seven years in Glenmarie.

It comprises 1,500 units of serviced apartments and SOHOs (small office-home office), to be developed above a 120,000 sq ft retail centre, and a purpose-build KDU University College Campus adjacent to it.

Teo, a substantial shareholder of Paramount with 27.62 per cent stake, said the company will launch the units in phases over seven years to capitalise on growth.

"We aim to launch the first batch in March. They will be priced between RM550 per square ft (psf) and RM650 psf. We are bullish on sales as this is the first of its kind development in Shah Alam," he said.

Teo expects construction works for the project to commence in the current quarter.

Paramount group chief executive officer Chan Say Yeong said the company will retain the complex, comprising 50 retail lots, to add to its recurring income.

"In the long run, we expect to have a certain sizeable portfolio to give us long-term generating income. When we have achieved a certain target, we will think of monetising the assets," he said.

Chan also said that the new KDU campus in Shah Alam will replace the existing campuses in Damansara Jaya and Section 13 in Petaling Jaya, which are parked under its subsidiary, KDU College Sdn Bhd.

Brahim's targets US$500m hajj deal

By Sharen Kaur
sharen@nstp.com.my
Published in NST on January 9, 2013

Brahim's Holdings is expected to supply 11.1 million meals a year to the Asian pilgrims and support personnel during the hajj

Brahim's Holdings Bhd, which aims to be a global player, is targeting a US$500 million project in Saudi Arabia to supply halal meals to Asian pilgrims performing hajj (annual pilgrimage) in Mecca.

The project is an initiative of the Establishment for Southeast Asian Pilgrims (Muassasah) and comes under its food production and distribution programme for hajj pilgrims.

Brahim's is preparing to submit its proposal to Muassasah this month, its director Datuk Howard Choo said.

Choo said Muassasah is expected to award the job, after evaluating all the proposals, next month.
"This is a 20-year contract. We are expected to supply 11.1 million meals a year to the Asian pilgrims and support personnel during the hajj," Choo told Business Times in a recent interview.

Every year, some 180,000 Muslims from Pakistan, 170,000 from India and 27,500 from Southeast Asia throng Mecca to perform the hajj. They require three meals a day for five consecutive days.

Choo said Brahim's has incorporated a subsidiary called Brahim's Labuan Ltd to undertake the project and develop a food factory there for about US$40 million to US$50 million. (RM122 million to RM152 million).

He said the Saudi government will allocate two-hectares of land to build the factory.

Brahim's will finance the cost to build the factory, which will be equipped with the latest technology in retort sterilised meals.

"The sterilised meals would have a shelf life of two years. We use Japanese technology and Brahim's was the first company in Malaysia to introduce it here many years ago," Choo said.

He said with the job in hand, Brahim's earnings will increase from this year.

"We expect annual turnover from the project to be in the region of US$25 million to US$30 million. Just like all other food businesses, profit margins would be around 15 to 16 per cent a year," Choo said.

"Besides this project, we are eyeing several other jobs in other parts of the world. We are not highly concerned of the global economic uncertainties as the food business is recession-proof," he added.

For the three quarters of its financial year just ended December 31 2012, Brahim's registered a pre-tax profit of RM13.4 million on the back of RM142.2 million revenue.

Brahim's completes buyout of unit,forecasts quantum leap in earnings

By Sharen Kaur

sharen@nstp.com.my

Published in NST on January 8, 2013

KUALA LUMPUR: Brahim's Holdings Bhd expects a quantum leap in net profit and revenue in the current year, to be driven by its wholly-owned subsidiary Brahim's-LSG Sky Chefs Holdings Sdn Bhd (BLSG), says director Datuk Howard Choo.

The group yesterday completed the process to buy the remaining 49 per cent stake it does not already own in BLSG from its German partner, LSG Asia GmbH, a company owned by Deutsche Lufthansa AG, in a deal worth RM130 million.

In a filing to Bursa Malaysia, Brahim's said it also signed a two-year technical assistance agreement with LSG Catering Hong Kong Ltd for electronic data processing as well as cost control and management technics.

Choo said the agreement will help Brahim's maintain global standards in catering and the halal requirement.
BLSG is an important asset for Brahim's, a manufacturer of famous household brand Brahims, as it owns 70 per cent of LSG Sky Chef-Brahim's Sdn Bhd (LSGB).

LSGB, which operates the in-flight catering business, is 30 per cent owned by Malaysia Airlines (MAS). It has a 25-year concession until 2028 to provide catering and related services to MAS at the Kuala Lumpur International Airport (KLIA) and the Penang Airport.

Besides MAS, LSGB also caters for 35 other airlines that land at KLIA. The company's operation in Penang caters to 10 airlines.

"This acquisition is important because it would give us a quantum leap in earnings. The immediate impact on Brahim's is that the group can now consolidate the net profit and revenue from BLSG by 100 per cent, instead of 35.7 per cent previously.

"Prior to the acquisition, Brahim's had to equity account its 51 per cent holding in BLSG. Now, it can fully recognise all the earnings," Choo told Business Times in an interview yesterday.

For fiscal 2010 and 2011, the total revenue generated by BLSG was RM314.1 million and RM336 million, respectively. As Brahim's held 51 per cent of BLSG, it could only equity account RM165.8 million and RM184.4 million, respectively.

"Instead of raking in around RM165 million and RM185 million in revenues a year from BLSG, we will now be able to generate over RM300 million a year from the company," Choo said.

Analysts viewed the deal positivelly as it would boost Brahim's net profit by 15 to 16 per cent a year.

"The jump in revenue and net profit will double for Brahim's in the current year. From 2014, there will be double-digit growth year-on-year. We estimate BLSG to contribute some RM348 million to Brahim's revenue next year, and close to RM360 million in 2015," said an analyst, who spoke on condition of anonymity.

This means Brahim's will be able to wipe out the RM170 million accumulated losses incurred by MAS Catering Sdn Bhd when it took over the business in 2003, by the end of this year.

MAS, which owned MAS Catering, had incurred losses to the tune of about RM200 million from the business with negative shareholders' funds of about RM80 million.

Choo said now that it has acquired the balance of shares in BLSG, it would embark on a RM2 million rebranding exercise, which includes the renaming of BLSG and LSGB, as well as changing the logo and signages.

According to Choo, BLSG would be renamed Brahim's Sdn Bhd, and LSGB, Brahim's Airlines Catering Sdn Bhd. It would be seeking approval from MAS on the matter.

IJM eyes West Coast Expressway jobs

By Sharen Kaur
sharen@nstp.com.my
Published in NST on January 8, 2013

KEY PACKAGES: Company's order book will thicken to over RM6b if it clinches deals, say analysts

IJM Corp Bhd, Malaysia's second biggest expressway operator, is eyeing key packages of the RM5.6 billion West Coast Expressway (WCE) project to boost its current order book of over RM3 billion.

"We are pleased to note that the WCE has been signed by the concessionaire and the government. Going forward, there is possibility that IJM will enhance its order book by participating in key packages of the WCE.

"We think tenders for the project will likely be called in the fourth quarter of this year after the financial closure. Construction may commence by year-end," IJM chief executive officer and managing director, Datuk Teh Kean Ming told Business Times.

Analysts said the construction of the WCE will boost IJM's order book to over RM6 billion if it is able to secure the key packages for the project.

West Coast Expressway Sdn Bhd (WCESB) last week sealed the concession agreement (CA) for the WCE project between Banting in Selangor to Taiping in Perak with the federal government after agreeing to certain terms and conditions. The deal was inked after several years of negotiation.

The biggest winner from this development is IJM as it owns 20 per cent of WCESB, and also a 25 per cent stake in Kumpulan Europlus Bhd (KEuro). This results in IJM having an effective stake of 38.2 per cent in WCESB.

The inclusion of WCE has further solidified IJM's position as the country's second largest expressway operator after PLUS Expressways Bhd.

IJM owns five highway concessions in India and now four in Malaysia, and it would likely add to its portfolio.

Despite the stake in WCESB, IJM, just like other construction companies, will have to bid for packages for the WCE project on an open tender basis.

IJM closed eight sen higher yesterday at RM5.20 while KEuro was down two sen to RM1.06.

The WCE will take five years to construct after which, WCESB will collect toll for 60 years as it is undertaken on build-operate-transfer terms.

The deal entails WCESB developing a 233km tolled highway from Banting to Taiping instead of the original 316km, cutting cost from RM7.07 billion to around RM5.6 billion.

It is understood that there is a 93km stretch between Banting and Taiping which is still in good condition, and a new road is not required.

"If WCESB were to build that stretch, it would eat into its profit margins as it is a non-toll road. The inking of the CA is a win-win situation for both the government and the concessionaire," a source said.

Last week, an English weekly reported that the privatisation deal for the Taiping-Banting highway had revised terms that were more favourable to the government.

The source said there is a new sharing mechanism, which is beneficial to the government.

"The government will also be reducing its subsidies for the project. Furthermore, if traffic volume on the WCE hits a certain target, there is a provision to shorten the concession to below 50 years," the source said.

Axis REIT looks to grow portfolio by 20pc this year

By Sharen Kaur

sharen@nstp.com.my

Published in NST on January 4, 2013

KUALA LUMPUR: Axis REIT Managers Bhd (ARMB), the manager of Axis Real Estate Investment Trust (Axis REIT), aims to grow its portfolio by 20 per cent a year, amid global market uncertainties.

The company is negotiating its portfolio for 2013 and the expansion will be financed via a private placement, said its chief executive officer Datuk Steward LaBrooy.

Axis REIT is an Islamic office and industrial property trust.

From an initial portfolio of five properties in 2005, the trust now has 32 properties worth about RM1.53 billion.

"As we move forward, we hope to grow in a managed manner. It is not a race for size but rather building a business that is resilient and profitable for our unitholders. We don't buy yields... we buy real estate!" LaBrooy told Business Times.

LaBrooy said due to worrying explosion of office space in Kuala Lumpur, ARMB will be stepping back from that segment temporarily "until the dust settles".

For now, it will focus on the industrial space, which has vast potential for growth, and increase its presence in Johor.

"The huge investments in Iskandar Malaysia are now bearing fruits with the influx on industrial and housing projects. We see ourselves having an increasing exposure to the Johor markets in the future.

"The office sector is compromised by low yields and fully priced assets with limited capital upside and the retail sector have difficulty accumulating assets for now," LaBrooy said.

He said ARMB has in place a five-year strategy plan to drive growth for Axis REIT, which includes focusing on tenant retention and enhancing returns from the portfolio.

The other key drivers are dividend growth, applying technology and sustainability to the operations and assets equally, carefully engineering enhancements to maximise rent and valuation of the assets, and maintaining the highest corporate governance standards to the operation.

It also entails managing operating expenditure and improving margins, refreshing the portfolio with timely sales of assets that have peaked or are underperforming and returning the capital gain to unitholders, and human resource development.

On the 2013 market outlook for REITS, LaBrooy said rising prices coupled with weak yields will be a hindrance in acquiring new assets.

However, he said the better REIT managers have already planned for these risks and they would be able to ride the storms if it occurs.

"The market for M-REITs will continue to remain in strong demand with tight pricing as investors chase these stocks well into 2013."

Prasarana targets maiden profit next year

By Sharen Kaur
sharen@nstp.com.my
Published in NST on January 4, 2013

Prasarana wants to improve its non-fare revenue from eight per cent to 20 per cent by 2017.

KUALA LUMPUR: Syarikat Prasarana Negara Bhd aims to be profitable for the first time next year, following expected reduction in operating cost, and increasing revenue via diversified resources, says its chief.

Prasarana wants to improve its non-fare revenue from eight per cent to 20 per cent by 2017. To achieve that, it will be expanding its property development activities.

It now has two joint venture (JV) projects in Kuala Lumpur with Crest Builder and Naza TTDI worth a combined RM1.2 billion. It is planning a new development in Brickfields worth around RM1.2 billion, and a RM700 million project in Ara Damansara, where its JV partner is TRC Sdn Bhd.

Set up in 1998 and operational from September 1 2002, Prasarana operates 170 bus routes within Klang Valley, Penang and Kuantan under RapidKL, RapidPenang, and RapidKuantan, respectively. It also owns and operates the Ampang and Kelana Jaya Light Rail Transit (LRT) lines, and the KL Monorail.

Group managing director Datuk Shahril Mokhtar said the bus operation has been loss-making since the start, with only 10 per cent of the routes making money.

Last year, although bus revenue was RM180 million, the operating cost was RM280 million. The rail business however, recorded profit of about RM50 million on revenue of RM240 million, Shahril said.

"We have spent up to RM10 billion in the last 10 years. How do we make money when we pay interests of almost RM400 million a year to service our debts of RM9 billion? The money comes from Prasarana and not the government.

"We want to be profitable which is why we are segregating the businesses to be more focused and result-orientated," he said yesterday at the unveiling of its new organisation structure and five-year Go Forward Plan (GFP) 2.0.

The new organisation structure includes the setting up of four new subsidiaries, each headed by a chief executive officer (CEO). This confirms a Business Times report yesterday.

The subsidiaries are Rapid Rail Sdn Bhd, Rapid Bus Sdn Bhd, Prasarana Integrated Management & Engineering Solution Sdn Bhd and Prasarana Integrated Development Sdn Bhd.

Shahril said each CEO will be responsible to improve the quality of services for their respective entity, and explore new business opportunities.

"We are targeting a positive and sustainable Ebitda (earnings before interest, taxes, depreciation, and amortisation) from this year. We plan to sell more MyRapid cards and optimise overall cost.

"From 2015, we will plan for network expansion to cater for the Mass Rapid Transit and new monorail developments. We may also take our rail network to other states," Shahril said.

Prasarana plans RM6b sukuk for projects

By Sharen Kaur
sharen@nstp.com.my
Published in NST on January 4, 2013

Prasarana is also planning to list its rail unit, Rapid Rail Sdn Bhd, on the Malaysian bourse by 2018

KUALA LUMPUR: Public-transport operator Syarikat Prasarana Negara Bhd will sell up to RM6 billion of sukuk this year to fund infrastructure projects.

Prasarana is also planning to list its rail unit, Rapid Rail Sdn Bhd, on the local bourse by 2018 to mark further expansion in the company.

The rail business includes the Ampang and Kelana Jaya light rail transit (LRT) lines, and the KL Monorail.

"We will list the unit after the completion of the Mass Rapid Transit (MRT) rail project in 2017," said group managing director Datuk Shahril Mokhtar.

Shahril said the inclusion of the MRT project under its umbrella will make the listing more attractive to shareholders.

Prasarana will take over the operations of the MRT after the project is completed.

"We know what are the listing requirements. For the next five years we will stick to that requirements," Shahril said yesterday, at the unveiling of its new organisation structure and five-year Go Forward Plan (GFP) 2.0.

On the Islamic bonds, which carry government guarantees, Shahril said they will be issued in two tranches of RM3 billion.

The first tranche will be issued in February and the second in the third quarter of this year.

"The bonds are basically to fund the Ampang and Kelana Jaya LRT line extension projects and other infrastructure developments," Shahril said.

Meanwhile, Shahril said Prasarana has received invitations to participate in the development of rail transport services in the Middle East and Africa.

The company is in talks with a major European rail operator to bid for rail network jobs in Saudi Arabia, he said.

Prasarana reorganises

By Sharen Kaur
sharen@nstp.com.my
Published in NST on Jan 3, 2013

Syarikat Prasarana Negara Bhd has set up several strategic business units (SBUs) under a new organisation structure, each with its own chief executive officer. The core of the structure is to improve efficiency and quality of services and reduce operating cost, said government sources.

The new structure, which was approved last month, became effective from Tuesday.

Prasarana group managing director Datuk Shahril Mokhtar had said last month that it was embarking on a massive corporate restructuring exercise to harness its commercial potential beginning January 1 2013.

The new SBUs are Rapid Rail Sdn Bhd headed by Khairani Mohamed, Rapid Bus Sdn Bhd by Zohari Sulaiman, Prasarana Integrated Management & Engineering Solution Sdn Bhd (Prime) by Amiruddin Ma'aris and Prasarana Integrated Development Sdn Bhd (Pride) by Rudyanto Azhar.
Khairani, Zohari and Amiruddin will also hold positions as group directors for rail, bus and infrastructure development, respectively.

Rudyanto, who will be in charge of development and commercial facilities, will also assist Shahril in strategic corporate planning and transformation.

New appointments to the board include Hazrina Minhad, formerly of Proton Holdings Bhd and CEO of MAS' transformation department.

Hazrina will assist Shahril and Rudyanto to drive and monitor the company's five-year business plan, the source told Business Times.

"Prasarana, under the leadership of Shahril, has improved a fair bit. The five-year plan and corporate restructuring will take it to a new level," he said.

Established in 1998 and operational from September 1 2002, Prasarana is a government-owned company tasked to upgrade Malaysia's public transportation system.

Via its subsidiaries, it operates 166 bus routes within the Klang Valley under RapidKL, 44 routes in Penang under RapidPenang, and three routes in Kuantan under its newly-launched RapidKuantan.

Prasarana became the country's biggest asset owner and major operator of public transport services after it took over the Klang Valley light rail transit (LRT) lines and the KL Monorail.

The biggest overhead cost for Prasarana is maintainance and upgrading of rail and buses, as well as infrastructure.

To diversify its income, Prasarana ventured into property development and has two projects, the first with Crest Builder to develop the Dang Wangi station into a commercial complex, and with Naza TTDI to build a residential complex in Taman Tun Dr Ismail, Kuala Lumpur.

Exciting times ahead for Malaysian REITs

ROBUST: Combined market capitalisation set to exceed RM35 billion with entry of KLCCP Stapled Group
THE Malaysian real estate investment trust (M-REITS) industry may see exciting times ahead as visibility and investability improves among international funds, says industry players.

The most promising factors for growth, however, will be the successful conclusion of the general election, said Axis REIT Managers Bhd executive director and chief executive officer, Datuk Stewart LaBrooy.

He said other positives for 2013 include the introduction of the Goods and Services Tax, which will improve government revenue, and Economic Transformation Programme projects, which will continue to boost the construction sector.

"The challenges include the global economy remaining in its current limbo, the ability to attract talent back to Malaysia, a chaotic general election and managing deficit. The economy will be back to growth once the uncertainty of the general election ceases to bear down on sentiment," LeBrooy told Business Times.

According to LaBrooy, 2012 was a banner year for M-REITs, as well as the region.

"M-REITs posted solid double digit returns in 2012 with yields being compressed to levels never seen before as investors fled the traditional equity market in favour of REITs.

"The recent initial public offerings (Pavilion-December 2011, IGB REIT-2012) were well received with multiple oversubscriptions for the stocks. They have done well post listing. The removal of the 10 per cent withholding tax for individuals would have improved the overall market," LaBrooy said.

Malaysian REITS are ranked fourth in the Asia Pacific region by the Asia Pacific Real Estate Association.

There are 16 REITs in Malaysia, with a combined market capitalisation of RM24.1 billion as at November 30 2012 (RM356 million in 2005).

This is projected to exceed RM35 billion with the proposed formation of KLCCP Stapled Group, by KLCC Property Holdings Bhd.

Sunway REIT Management Sdn Bhd chief executive officer Datuk Jeffrey Ng said the M-REITs market has extended its strong performance (total return) in 2011.

"While we expected the M-REITs to continue to grow with the inclusion of new REITs into the market, we are surprised with the strong performance in the unit prices of the REITs, compressing the distribution yields," Ng said.

The average distribution yields for M-REITs have been compressed from 7.1 per cent in 2011 to 6.2 per cent in 2012. Similarly, the top four retail M-REITs (by market cap) were trading at distribution yields of 5.7 per cent in 2011 and have been compressed to the five per cent mark in 2012, he said.

Sunway REIT is one of the largest retail-focused REITs in Malaysia. It has RM4.95 billion in assets under its management, including Sunway Medical Centre.

Ng expects the retail market to remain buoyant with major malls registering average occupancy rates of 95 per cent and above, underpinned by strong consumerism, young population and growing affluence of the nation.

He said the growth in retail sales will be further supported by higher levels of personal disposable income, stable employment, salary increments and bonuses and positive employment prospects.

"The tourism business is expected to remain buoyant, benefiting from ongoing promotional activities to attract tourists ahead of Visit Malaysia Year in 2014," he said.