Revenue boost from Burger King

By Sharen Kaur
Published in NST on November 28, 2014


BRAHIM’S Holdings Bhd (BHB) says its interest in the Burger King franchise in Malaysia and Singapore will help to reduce its dependency on in-flight catering.

According to founder and executive chairman Datuk Seri Ibrahim Ahmad, the Burger King franchise will contribute around RM300 million to the company’s revenue next year.

“This is part of our efforts to reduce our dependency on in-flight kitchen, which currently contributes a bulk to our net profit and revenue. We want diversification and not to be over dependent on one sector,” Ibrahim told Business Times.

BHB provides in-flight catering to Malaysia Airlines (MAS), AirAsia and 34 foreign airlines at the Kuala Lumpur International Airport and Penang International Airport.

MAS alone accounts for 75 per cent and 90 per cent of Brahim’s revenue and profit, respectively.

BHB’s 70 per cent-owned Brahim’s Airline Catering Sdn Bhd holds a 25-year concession to supply in-flight meals to MAS.

BHB’s net profit for the first six months ended June 30 2014 was higher at RM5.72 million from RM3.69 million a year ago.

The company has acquired the Burger King franchise from Ekuiti Nasional Bhd (Ekuinas) for RM95 million.

The investment was made via its wholly-owned unit, Brahim’s Trading Sdn Bhd, which holds 80 per cent interest in a special purpose vehicle (SPV) leading the acquisition.

Quantum Angel Sdn Bhd, a private equity firm managed by Zulu Capital Sdn Bhd which is led by Datuk Ahmad Zaki Zahid, holds 20 per cent of the SPV.

Ibrahim said that there are around 54 Burger King outlets in Malaysia and some 38 in Singapore, and the numbers would be increased annually.

“That would give us additional revenue from 2016 onwards. We are quite positive on the fast food business,” Ibrahim said, adding that at a later stage, BHB will divest up to 40 per cent equity in the SPV to strategic co-investors.

“There are a few interested parties who want to come into this venture and together we will expand the business,” he said

UEM Sunrise mulls Australian expansion

By Sharen Kaur
sharen@mediaprima.com.my
Published in NST on November 25, 2014

UEM Sunrise Bhd, which has two property projects in Melbourne, Australia worth an estimated A$1.1 billion (RM3.19 billion), is eyeing new  landmark sites in the country for expansion purposes.
Managing director/chief executive officer Anwar Syahrin Abdul Ajib said, the company is also studying several offers from Australian companies to help develop projects in the suburbs.
UEM Sunrise made its entry into the Australian property market in October last year when it acquired a 0.4ha site on La Trobe Street and a 0.4ha site on Mackenzie Street for A$65 million (RM189 million).
The company unveiled the first project, the A$770 million Aurora Melbourne Centre on La Trobe Street, earlier this month.
The project on Mackenzie Street known as The Conservatory worth about A$300 million will be unveiled by June next year.
Anwar said UEM Sunrise is not resting on its laurels with just the two projects in hand.
He said the company wants to build more properties in Australia to ride on the expanding economy and population growth in Melbourne and Sydney.
“As a company, we will continue to introduce new products that people  want to buy and invest in. We are zooming in on a few sites. We are not just looking at high-rise developments in Melbourne’s central business district.
“If the numbers are good (elsewhere) and we think there is no risk, we will bring it to the board to decide,” he said at a media briefing, here, yesterday.
On Aurora Melbourne Central, Anwar said UEM Sunrise is proud of the project not only because the land value has doubled since the acquisition a year ago and it offers good margins, it has achieved sales of more than 95 per cent in two weeks, a record for the company.
He also said the project opens the doors to investors to know more about UEM Sunrise and its developments in Malaysia, especially in Greater Kuala Lumpur and Johor.
Aurora Melbourne Central has 941 apartments, priced between A$395,000 and A$1.1 million and 22 per cent of the units were bought by Malaysians, said UEM Sunrise chief operating officer, commercial, Raymond Cheah.
Cheah said, 25 per cent were purchased by Australians, 15 per cent by  Singaporeans, and the rest by Hong Kong and Chinese investors.
The project also comprises retail, commercial office and serviced apartment/hotels and it is slated to be completed by 2019.
Cheah said, the ground breaking for the project, which is set to be Melbourne’s largest integrated mixed-use development, will start in  March or April next year.
The Melbourne project is expected to drive the firm’s sales for the current fiscal year.
The company will be announcing its third-quarter results tomorrow.

UEM Sunrise CEO Anwar Syahrin Abdul Ajib (left) and commercial operations COO Raymond Cheah at the media briefing yesterday. Pic by Mohd Yusni Ariffin 

 

Naza to ensure quality despite higher costs

By Sharen Kaur
Published in NST on November 21, 2014

Naza TTDI’s SM Faliq SM Nasimuddin says property prices will rise next year but will not solely be due to GST.

NAZA TTDI Sdn Bhd, the property development arm of the Naza group, says house buyers should be aware that the Goods and Services Tax (GST) is not an avenue for developers to make money.

“GST payments go straight to the government. In fact, our information and communication technology system is being upgraded to prepare for this change, as our finance division will have to submit GST filings to the government starting April next year,” says Naza TTDI deputy executive chairman and group managing director SM Faliq SM Nasimuddin.

He adds that he does anticipate property prices to increase next year, especially the commercial units, but they will not solely be due to GST.

“The reality is, although purchasers of residential units will not take on the cost incurred due to GST, as developers, we are still paying the six per cent input tax, such as contractors’ claim, consultant fees and marketing cost. There is also a need to invest in ICT system upgrade and training for staff when GST takes effect. The increase in cost will impact developers.

“To mitigate the expected rise in cost, Naza TTDI is looking to reengineer value and cost efficiency strategies without compromising on quality. But we cannot control the increase in prices of land and some building materials, which will eventually lead to increase in house prices.”

Faliq, however, expects sales to soften and some challenges in margin management.

“Since the GST will be replacing the usual sales and service tax, prices of some materials are expected to be competitive. The profit margin will fall to between three and four per cent.

“The financing structure will be affected, too, especially on commercial properties. Another challenge would be to absorb GST for the completed and unsold stock. We can expect fewer transactions for six to nine months post-GST as the market digests its impact and recovers.”

Faliq does not expect the GST to impact its high-profile developments, notably the RM4 billion Platinum Park and the RM20 billion KL Metropolis integrated mixed development in Kuala Lumpur.

“We do not foresee the take-up rate to drop drastically. These two projects are targeting niche, premium and corporate buyers. These two high-impact projects will not suffer as much, because it will be priced competitively.”

Faliq says despite the implementation of the GST next year and its expected outcome, Naza TTDI will continue to launch a mix of township development products and premium properties in TTDI Alam Impian, TTDI Grove and TTDI Sentralis.

He says a showcase of the company’s existing product offerings should take place pre-GST, while a combination of mixed-development launches will take place post-GST.

Faliq said Naza TTDI will emphasis on its brand value — Value, Innovation and Quality — when selling its products.

“Not everybody buys based on product pricing. Some will look for trust, brand quality and also the developer behind the product. We are looking into value and innovative added services to maintain the quality of relationship with our purchasers.

“While cost is increasing, we are exploring other alternatives, such as going green with electronic and digital systems, to sustain sales. But in the end, relationship and customised service are the key in any kind of business, whether in good times or bad times, and this is what we are focused on,” Faliq said.

GST - Minimal impact on prices

By Sharen Kaur
Published in NST on November 21, 2014

GST MISCONCEPTION: No more than 5pc rise as residential properties are exempt-rated

THERE is a misconception that house prices will increase more than five per cent following the implementation of the Goods and Services Tax (GST) in April next year.

There is no doubt that the GST will result in an overall price increase, but the impact should be minimal on the residential segment and more on the commercial half.

The market has been talking about a five per cent increase in the prices of residential properties, but developers are not supposed to be charging more for properties built on residential land as they are exempt-rated under GST.

There will be three categories under the GST scheme: standard-rated, zero-rated and exempt-rated.

In the standard-rated category, local supply of goods and services, supply of land and building for commercial, administration or industrial purposes, and construction of all types of buildings will be subject to GST.

The tax will be billed and collected by businesses and paid to the government. Every party, except the final consumer, can claim back credits on the GST that they have paid. This is called input tax.

Goods and services under the zero-rated category will be charged a zero per cent GST rate. This means that GST is not charged to the final consumer but businesses can claim back credits on their input tax. This is applicable for export sales, international services, basic foodstuff (meat, fish, cooking oil) and agricultural supplies.

Exempt-rated GST are goods and services that are non-taxable nor are subject to GST at the output stage. This means that GST is not charged to the final consumer. Businesses, too, cannot claim back credits on their input tax. Examples of goods and services in this category are transport, toll or highway, certain financial services, sales, lease of residential land, residential properties, private healthcare and education.

In the real estate sector, although residential properties fall under the exempt-rated basket of goods, GST will be applicable for commercial property purchases as they are standard-rated.

Urban Well-being, Housing and Local Government Minister Datuk Abdul Rahman Dahlan said recently house prices could increase by two to three per cent post-GST, based on a study by the Real Estate Housing Developers Association of Malaysia.

He said action would be taken under the Anti-Profiteering Act if property prices were to go beyond three per cent.

Abdul Rahman added that developers who raised house prices beyond three per cent could be referred to the GST monitoring committee under the Domestic Trade and Consumer Affairs Ministry.

“My concern is that prices are hiked not because of the GST but due to excessive profiteering. According to our calculations, the increase should only be about three per cent,” he said.

Deputy Finance Minister Datuk Ahmad Maslan said based on the calculations by the Finance Ministry and the Customs Department, any increase in house prices due to GST could be one or two per cent.

That, too, is just temporary as a number of measures have been put in place to curtail the rises, he said.

Among the measures are increasing the real property gains tax from 15 to 30 per cent, increasing the minimum purchase price of houses by foreigners from RM500,000 to RM1 million, and barring developers from using the Developer Interest Bearing Scheme.

Meanwhile, Sarawak Housing Minister Datuk Amar Abang Johari Tun Openg said buyers would not be burdened by the six per cent GST as developers would enjoy an input tax deduction for the building materials that they use.

They have to pay GST for the materials, of course, but at the end of the (building process) chain, developers can claim the amount back.

“The price of houses cannot be higher than what it is now. At the moment, you are paying 10 per cent government tax plus six per cent sales tax. If GST is imposed at six per cent, then it should be lower. That’s the logic,” he said.

Based on the Sales Tax Act of 1972, basic building materials such as bricks, cement and floor tiles fall under First Schedule Goods, in which they will not be subjected to sales tax.

Other building materials fall under Second Schedule Goods, in which they will only be charged a five per cent sales tax.

Under GST, all building materials and services, including that of contractors and engineers, will be subject to GST with a standard rate of six per cent. This will invariably raise the production cost for developers.

Although a developer cannot impose GST on residential properties, the company would have to pay the tax on building materials and services.

The developer could either absorb the higher cost and make less profit, or pass it on to home buyers by raising the house price.

Meanwhile, turnkey contractor and builder Melati Ehsan Holdings Bhd will continue to pursue quality investments and acquisition of landbanks in strategic locations despite the cooling measures put in place and the GST implementation next year, said its executive director Datuk Tan Hong Hing.

“In the first half of this year, the property sector has been relatively quiet as predicted, as the market was reacting and absorbing the cooling measures implemented by the authorities. The second half of the year is becoming slightly active in terms of new launches and prices in selected locations are looking relatively attractive.

“The buying interest should progressively return as potential property purchasers and investors will come to understand that the property prices are unlikely to fall and that potential inflationary pressures from the implementation of GST could further push up property prices. Under the GST, developers will have to absorb the input GST, which is not passed on to the house buyers via output GST,” Tan said.

Melati Ehsan is optimistic to further grow its property arm, especially in the affordable segment, despite the current challenges.

“This segment has been underserved for many years now and there is a strong sign of demand. Overall, the fundamentals that drive the property market are still strong and these are proven in the high number of housing loan applications, but approvals have fallen due to strict assessment criteria implemented under the cooling measures.

“We are constantly looking for new landbanks for future development and expansion plans. Focus will be given to the areas where we have a presence and we will lock it in if the price and payment terms are attractive,” Tan said.

Melati Ehsan has a few construction and development schemes in hand, which have combined order book value of about RM3.8 billion.

Tan said these projects will keep the company busy for the next three to five years, contributing positively to its earnings.

No hidden agenda (for MAS)

By Sharen Kaur
Published in NST on November 19, 2014

BACK TO PROFITABILITY: Jentayu Danaraksa says it can revive MAS for less than RM6b

JENTAYU Danaraksa Sdn Bhd, which proposed an “alternative plan” for loss-making Malaysian Airlines (MAS) recently, said it can revive the carrier for less than RM6 billion and make it profitable in a few years.

Its director Shukor Yusof said the final investment cost would depend on how (if at all) the company’s proposal was viewed and if it was accepted by the government.

“We plan to rehabilitate MAS and wean it from further using taxpayers’ money. The airline business is capital intensive and MAS must be focused on building its cash reserves, which means to avoid borrowings until its cash flow stabilises.

“As with any major restructuring, especially with a company saddled with RM12 billion debts and yearly finance charges amounting to over RM400 million, the investment structure will be immensely complex.

“We will share it with the public if we get a chance to work with Khazanah Nasional Bhd. We are confident it will cost us much less than RM6 billion to save MAS,” he told Business Times.

The newly set-up financial advisory firm submitted an alternative proposal, which it said would complement Khazanah’s 12-point plan, to Prime Minister Datuk Seri Najib Razak on November 3.

Khazanah has received minority shareholders’ approval to take MAS private, and this will kick-start the plan it announced on August 29 to overhaul the airline.

Under the plan, Khazanah will inject RM6 billion into MAS, as well as take it private, axe 6,000 jobs, reduce the scale and size of the company, renegotiate contracts and set up a new outfit to take over the operations by July 1 next year.

Jentayu’s plan for MAS will focus on growing the airline business instead of reducing its assets and workforce.

The company plans to acquire Penerbangan Malaysia Bhd (which owns four aircraft), MAS Engineering Sdn Bhd, Firefly Sdn Bhd and 82 planes from MAS’ fleet.

“There is no hidden agenda. We are not testing anything. We want to categorically state that there are no unscrupulous intentions. Tan Sri Abdul Aziz (Abdul Rahman) is our chairman. As many Malaysians know, he has contributed vastly in the legal and airline sectors.

“But we have not heard from Khazanah so far,” Shukor said.

He said Jentayu had the funding in place and identified potential investors from various geographic locations for its plan.

Jentayu, which has an authorised capital of RM100,000, was founded by Abdul Aziz, who was MAS managing director until 1991.

Besides, Shukor, who was an aviation analyst at US rating agency Standard & Poor for over 13 years, the other directors of Jentayu are Feriz Omar of Feriz Omar & Partners (Strategists & Advisors), an investment banking and corporate advisory firm.

The Jentayu team also comprises Datuk Seri Zakaria Bahari, who is group chief executive of Radimax Group Sdn Bhd (formerly, Realmild (M) Sdn Bhd); Datuk Abdul Rahim Mohd Zin, former director of Senai Airport Terminal Services Sdn Bhd; and Daruis Zainuddin, a director of AIA and American Insurance Group.

Making Greater KL one of world’s most liveable cities

By Sharen Kaur

SUSTAINABLE highway and railway development through careful planning, design and execution provides positive social, economic and environmental values.
A proper integration of public transport will complement the urban development of a city and establish more liveable communities under the banner of sustainable development. Liveable communities are places with high social and environmental quality where people have access to the necessary facilities and amenities, including public transportation, work place, healthcare services, entertainment and recreation.
The key focus for sustainable road and railway development is how the two are designed to interface with the city to bring about the potential benefits.
Many countries have recognised the importance of linking the developed towns and districts throughout cities with new highways and railway lines. Their goal is not only to become one of the most liveable cities in the world but to provide sustainable and quality living standards for its residents.
According to a global survey from the consulting firm Mercer, Vienna, Austria’s opulent capital, offers the best quality of life of any city in the world. Zurich, Munich, Dusseldorf and Frankfurt made it to the top 10. Kuala Lumpur is at No. 80.
The assessments are based on 39 criteria, including political stability, healthcare, education, crime, recreation and transport and environmental developments.
The aim to make Greater Kuala Lumpur a sustainable and livable city can easily be achieved with high-quality infrastructure, green spaces and developing inner city residential
areas.
Developments like the Klang Valley mass rapid transit system (KVMRT), the Ampang and Kelana Jaya light rail transit (LRT) line extension, increasing pedestrian walkways and the Klang River beautification project to promote recreation, urban revitalisation and real estate development will contribute in making Kuala Lumpur one of the most liveable cities in the world by 2020.
Under the Budget 2015, the government announced the implementation of several highway and railway projects starting next year, worth a combined RM76 billion.
Topping the list of new projects are Line 2 of the KVMRT from Sungai Buloh to Putrajaya (RM23 billion), LRT Line 3 between Bandar Utama and Klang (RM9 billion), and Pan-Borneo Highway (RM27 billion).
Several new highway projects will also commence in the Klang Valley. They include the Sungai Besi-Ulu Klang Expressway (Suke), the West Coast Expressway from Taiping to Banting, the Damansara-Shah Alam Highway (Dash) and the Eastern Klang Valley Expressway.
Goh Bok Yen, an urban, land use and transportation planning consultant firm, said the construction of Suke and Dash will complete the loop around Greater Kuala Lumpur and enhance accessibility and connectivity to townships and property development projects as far as Port Klang, Kuala Selangor,Rawang, Putrajaya, Sungai Besi, Kajang and Bangi.
“These are the only missing links in completing the loop. Certainly, all the railway and road projects will create new development tracks. That is one of the logical ways to start creating mobility along the corridor of the mass transportation system. However, when selecting the alignment and choosing the transport hub or stations, we must be very careful to minimise the impact, particularly to the already developed areas.
“All railway and road projects will definitely improve the living standards of Malaysians as there will be better access and connectivity to townships and property development projects,” Goh told Property Times.
Suke will start from Sri Petaling and pass through Sungai Besi, Desa Tun Razak, Alam Damai, Bukit Manda’rina, Taman Len Seng, Taman Bukit Cheras, Taman Bukit Permai, Taman Putra, Taman Permai Jaya, Taman Dagang Permai, Taman Kosas, Ampang, Taman Hillview and exit at Ulu Klang.
It will serve as a link between Middle Ring Road 2 (MRR2), Damansara-Ulu Klang Expressway (Duke), Ampang Kuala Lumpur Elevated Highway (Akleh), Kuala Lumpur Outer Ring Road (Klorr), the Sungai Besi extension, Kuala Lumpur-Seremban Highway, Cheras-Kajang Highway, Besraya Highway and Shah Alam Expressway (Kesas).
Dash will commence at the Puncak Perdana U10 Shah Alam intersection and will link areas such as Puncak Perdana, Alam Suria, Denai Alam and Kampung Melayu Subang. Dash will also link road users to LDP and Sprint highways.
“There will be a link from Dash to the Guthrie Corridor. From there, motorists can travel towards the LDP to go to Damansara Perdana and Penchala Link, to head on to Mont’ Kiara. From Mont’ Kiara, they can use Duke to head to Ulu Klang and the MMR2. Suke will bring motorists to the North South Expressway. From there, they can join Kesas and head straight to Port Klang or use MEX to go to Putrajaya. I feel that with all these connectivity, more people would be willing to leave in the outskirts of Kuala Lumpur,” Goh said.

An artist’s impression of Crest Builder’s proposed mixed development above the Dang Wangi LRT

 

 

 

Building on connectivity

By Sharen Kaur
Published in NST on November 14, 2014

SEAMLESS ACCESS: Transit-oriented developments a boon to real estate market
THERE is a growing interest for transit-oriented developments (TOD) in Malaysia.
TOD is a mixed-use residential and commercial project designed to maximise access to public transport. Under the TOD model, feeder services are provided between the railway stations. Public transport interchanges are constructed next to the stations for easy access to the feeder services.
Hong Kong plays a leading role in implementing TOD and enhancing rail and development integration with good station accessibility and connectivity.
For instance, new towns have been developed successfully around stations along the Tseung Kwan O Line. These new towns are centred around a rail station which is connected seamlessly to malls and housing estates.
Interchange facilities are also provided near the stations for transfers to other public transport.
In Kuala Lumpur, the KL Sentral development in Brickfields by Malaysian Resources Corp Bhd was the first project to be developed using the TOD model.
Spread across 29.16ha, KL Sentral encompasses the RM1.1 billion Stesen Sentral, Grade-A office towers and suites, residences, hotels and a mall.
Being part of an exclusive urban centre built around the country’s largest transit hub, KL Sentral offers global connectivity, excellent investment opportunities and an international lifestyle.
Stesen Sentral is where six rail networks converge, including the LRT, ERL, KTM and also the monorail, which it connects to via a pedestrian walkway.
Residences at KL Sentral have seen great capital appreciation and rental demand.
Prasarana, the owner and operator of several public transport providers, namely the Ampang and Kelana Jaya LRT lines; KL Monorail system; bus operations in the Klang Valley and Penang; and cable car services in Langkawi, has several parcels of land for development.
The assets that Prasarana owns, which are in the form of LRT stations, depots and Park-n-Ride facilities, hold vast potential to generate long-term income for the company.
Through its unit, Prasarana Integrated Development Sdn Bhd (Pride), it will tap and maximise on the economic potential of land banks and real estates along the Ampang and Kelana Jaya LRT lines.
Pride will allow Prasarana to be a key player in the country’s expanding property sector.
Prasarana had identified more than 13 parcels of land for development along its future and existing LRT stations. Agreements have been inked with six developers for joint mixed-property developments along its LRT extension lines in Dang Wangi, Brickfields, Kelana Jaya, Awan Besar, Ara Damansara and Taman Tun Dr Ismail.
For the Kelana Jaya LRT, Crest Builder Holdings Bhd will undertake a mixed use development which will be integrated with the station.
Crest Builder inked the joint-venture agreement with Prasarana last year for the RM1 billion project, beating out firms such as Ahmad Zaki Resources Bhd, the MCT group and TH Properties Sdn Bhd.
Under the joint-venture agreement, the construction firm’s wholly-owned unit Crest Builder International Sdn Bhd will develop the 2ha land into serviced residences and offices.
As the landowner, Prasarana is entitled to 24.8 per cent of the gross development value, or RM248 million, from the joint-venture deal.
This is Crest Builder’s second joint venture with Prasarana to monetise its land bank along rail lines.
Two years ago, Crest Builder bagged the development of a RM1.04 billion project, comprising a 40-storey tower atop the Dang Wangi LRT station along Jalan Ampang in Kuala Lumpur. It was this project that marked Prasarana’s foray into property development.
In early 2013, Prasarana announced an RM687.5 million commercial-residential project in Ara Damansara with TRC Synergy and an RM153 million 26-storey condominium tower in Taman Tun Dr Ismail with Naza TTDI.
For the land in Brickfields, Prasarana inked a joint-venture agreement with Bina Puri Holdings Bhd, which will undertake a RM1.3 billion mixed development and link it to the Tun Sambanthan monorail.
Bina Puri will build 1,660 units of small office-versatile office compressed in three towers, a 22-floor serviced suite, a commercial podium, a sky bridge and car park on a 1.9ha site.
IOI Properties Group Bhd and SM Land Sdn Bhd will each develop a 2.83ha site in Puchong and 2.02ha in Awan Besar, which will have a gross development value (GDV) of RM500 million and RM600 million, respectively.
Prasarana would get about 16 per cent out of the GDV from the property sales. In addition to that, Prasarana will have a joint-venture company manage the commercial space leased, providing it with additional income.
Prasarana’s non-fare businesses currently make up 10 per cent of its revenue while it gets the rest of its income from fare-based operations, including rail and bus.
Prasarana Negara Bhd group managing director Datuk Seri Shahril Mokhtar expects the company’s non-fare revenue to contribute 30 per cent to its revenue by 2018, and to maintain that at 40 per cent in the following years.
“With all these property developments taking place within the LRT station area, we can expect an increase in property value and ridership. Over the next five years, we can expect ridership to surpass one million a day, from 530,000 currently, on the Ampang and Kelana Jaya LRT lines and the monorail,” Shahril told Property Times.
Prasarana has identified several more areas for development along the Ampang and Kelana Jaya LRT lines.
Shahril said some of the projects will be offered to developers via a direct negotiation basis as they currently own the land.
“For land that we own, we will call for an open tender. Most of the projects will be implemented using the TOD model. That is the trend now as house owners look for integrated developments with good public transport and connectivity. KL Sentral started this trend with its transit hub. From that idea, we started to build based on TOD,” Shahril said.

An artist’s impression of the Prasarana property development project in Brickfields

 

 

 

UEM Sunrise - Surpassing RM2 billion sales target

By Sharen Kaur
sharen@mediaprima.com.my
Published in NST on November 5, 2014


BRIGHT OUTLOOK: Melbourne project, landbank sale to enable UEM Sunrise to beat target
UEM Sunrise Bhd, one of the country’s biggest property developers, may exceed its RM2 billion sales target this year, driven by its maiden  residential project in Melbourne, say analysts.
  They also expect the company to dispose of some of its landbank in Johor by the end of the year.
UEM Sunrise is expected to start construction of the Aurora Melbourne Central on La Trobe Street in Melbourne early next year.
  The massive 92-floor skyscraper with 941 serviced apartments will have a gross development value of A$770 million (RM2.23 billion).
As at last Friday, 403 units worth A$202 million had already been snapped up.
“I understand that UEM Sunrise is also looking to or is in the midst of selling some of its landbank in Johor. If this happens, then its sales for this year could surpass RM2.5 billion,” said one of the analysts.
UEM Sunrise had slashed its full-year sales target to RM2 billion from RM3.2 billion due to a challenging market environment and weaker financial results in the second quarter ended June 30.
“I am not sure whether the project has saved the day but I think the company should have foreseen this when revising down the guidance,” he added.
In the second quarter, net profit declined 30.6 per cent year-on-year (y-o-y) to RM74.5 million from RM107.3 million previously, mainly due to cost revision made in certain projects.
Revenue dropped 5.9 per cent y-o-y to RM447.6 million from RM475.9 million previously due to lower property development income.
  For the first half of the year, UEM Sunrise posted a net profit of RM136.05 million, down from RM318.42 million previously, while revenue was RM849.18 million versus RM1.17 billion in the same period a year ago.
  UEM Group managing director and chief executive officer Datuk Izzaddin Idris said recently that UEM Sunrise’s total sales stood at RM560 million as at end-August, while unbilled sales were RM3 billion.
  He added that the Melbourne project was expected to contribute 25 per cent to the company’s total targeted sales, while 60 per cent would come from projects in Nusajaya and the balance from developments in the Klang Valley.