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Tuesday, May 20, 2008

Mixed views on property outlook

PETALING JAYA: While share prices of property stocks have been severely sold down from their peaks, analysts are still divided over the prospects of the sector.

Aseambankers in a report said the outlook remained uncertain in the immediate future, no thanks to rising inflation, which could hurt consumers’ pockets.

Escalating building material prices also add pressure to construction cost, leading to margins squeeze and delays in new launches, it said, adding that local political risks and external economies had resulted in developers and homebuyers adopting a “wait-and-see” stance.

In the short term, developers are depending on strong sales locked in over the past two years to deliver earnings growth.

On the upside, developers were seeing general improvement in public delivery, with better efficiency and less red tape post-election, Aseambankers said.

A bank-backed brokerage said the take-up rates for most launches post-election were about 50% or less, way below what the developers had enjoyed earlier.

It doesn’t help that there seems to be some downside risk to this year’s economic growth assumptions.

The research house said buying sentiment would remain cautious, at least until Umno’s party elections in December, which might have an impact on many developers’ sales this year.

Both Aseambankers and the bank-backed brokerage have a neutral call on the property sector.

Meanwhile, another research house believes that the market is ignoring the deep value offered by some high-quality developers.

“It is not fair to apply a broad brush approach when evaluating the property sector given that there are hundreds of developers in Malaysia, each with its unique characteristics,” it said.

The brokerage added that sales of some of the high-quality developers dropped 36% in the first quarter compared with the previous quarter but were up 50% on year-on-year basis.

Unbilled sales increased 21% quarter-on-quarter and 68% year-on-year to RM6.5bil, while mortgage approvals hit a high of RM5bil in March.

The brokerage said rising inflation and raw material prices as well as domestic and external uncertainties were likely to affect demand for the low- to mid-end segments of the market.

It has an overweight recommendation on quality developers of mid-high end residential properties with portfolios of commercial and retail assets, on expectations of good take-up rates in upcoming launches, positive changes in policies, strong earnings delivery and sustained margins.

By The Star (by Yeow Pooi Ling)

MBAM, Asli to hold construction summit June 3

MASTER Builders Association Malaysia (MBAM) and the Asian Strategy & Leadership Institute (Asli) will organise the inaugural Malaysian Construction Summit 2008 (MCS 2008) on June 3 in Kuala Lumpur.

Themed "Addressing Supply Chain Bottlenecks for Sustainability", MBAM president Patrick Wong said the summit is organised in response to the immediate need for a high-level strategic platform to look into key issues affecting the construction industry.

The association hopes that industry stakeholders will participate in the summit and brainstorm with representatives from various ministries and other construction industry players.

In a statement issued yesterday, Wong said the MCS 2008 committee has made the effort of bringing in experts to discuss key topics such as building material supply issues and human resource-related problems.

"At the summit, we will try to recommend solutions for the benefit of the industry," he said.

Domestic Trade and Consumer Affairs Minister Datuk Shahrir Abdul Samad will deliver the keynote address, while Construction Industry Development Board (CIDB) chairman Tan Sri Jamilus Hussein will deliver the closing address and deliberate on the way forward.

MCS 2008 is endorsed by CIDB, the Real Estate and Housing Developers Association, Pertubuhan Arkitek Malaysia, Institution of Engineers Malaysia and Chartered Institute of Buildings Malaysia, among others.

By New Straits Times

Wijaya Baru eyes US$3b jobs - Infrastructure work available in Vietnam

WIJAYA Baru Global Bhd has signed a memorandum of understanding (MOU) with a Vietnamese authority to bid for infrastructure projects worth an estimated US$3 billion (RM9.8 billion).

The potential jobs in three districts in Ho Chi Minh City include the construction of an elevated highway, flood mitigation, a water treatment plant, solid waste treatment and garbage collection.

Wijaya Baru deputy chief executive officer Faizal Abdullah said that it is conducting a viability study, to be completed by the year-end, on the projects.



"We do not want to rush into it. We want to carry out a detailed design and financial proposal, which will take about nine months (to complete)," he said in an interview.

"The projects will be nothing less than US$3 billion," he added.

"We have the first right of refusal for the projects," Faizal said, adding that the MOU was signed in February.

The elevated highway, flood mitigation and water treatment plant will be undertaken on a build-and-manage basis, while the solid waste treatment plant and garbage collection projects will be carried out on a build-operate-transfer.

"Once we start, it could take up to three years to complete," he said.

If Wijaya Baru finds the projects viable, it will look for a Vietnamese partner and hold the majority stake in the formation of a joint-venture company.

At present, Wijaya Baru is undertaking a RM340 million flood mitigation project in Selangor, which will be completed next year.

The company, which derives most of its revenue from timber, anticipates a large portion of its profits this year to come from infrastructure projects.

By New Straits Times (by Vasantha Ganesan)

Wijaya Baru set to win flood mitigation job

WIJAYA Baru Global Bhd's 45 per cent associate, Wijaya Baru Sdn Bhd, is expected to be the main sub-contractor of a RM300 million flood mitigation project in the East Coast.

Wijaya Baru expects to receive up to 80 per cent of the RM300 million job.

We have signed an agreement with a friendly party who has been given a letter of intent for a flood mitigation project in the East Coast.

"A letter of award is expected to be given in the next two weeks to 30 days," its deputy chief executive officer Faizal Abdullah said.

"Eighty per cent of the RM300 million project would be Wijaya's portion," he added.

"The party has carried out all the designs, finished all negotiations and sent them to the Ministry of Finance and is awaiting the Letter of Award," Faizal said.

The flood mitigation project, expected to commence in June this year, will take about three years to be completed.

According to Faizal, the project will take longer than usual due to the monsoon season in the East Coast.

Meanwhile, Wijaya Baru (through its associate) is expected to complete the RM340 million flood mitigation project awarded to it in August 2007 by February/March 2009.

"We have RM275 million more to do which will take us one-and-a-half years to complete. It should be completed by March 2009," he said.

"We are also talking to the relevant authorities for the second phase of the Selangor flood mitigation that we are carrying out right now.

"We have started doing the design. We have been told to come out with the technical proposal on the areas that we need to look at to address the flood problems in the lower Klang Valley," Faizal said.

He added that he expects the news on the award of the project with an estimated value of RM1 billion, to be announced later this year.

"To solve the problem at the Sungai Damansara catchment, you need to spend a minimum of RM1 billion to have 100 years of protection.

"I would like to think that we are given the first right of refusal. We have done tremendously for design ... but I am in no position to decide," he said.

He added that Wijaya Baru also saw opportunities in Pahang, Kedah, Johor and Malacca.

"We want to specialise in flood mitigation projects. We would like to position ourselves in a way that when one thinks of floods, they think of Wijaya," he said.

By New Straits Times (by Vasantha Ganesan)

Partnerships worth US$1.65b sealed at IT congress


FIVE partnerships worth more than US$1.65 billion (RM5.36 billion) in trade and investment were sealed at the 16th World Congress on Information Technology (WCIT 2008) yesterday.

The signing of agreements was witnessed by the Prime Minister Datuk Seri Abdullah Ahmad Badawi.

Also present at the event were Malaysia’s Science, Technology and Innovation Minister Datuk Dr Maximus Johnity Ongkili, Johor Menteri Besar Datuk Abdul Ghani Othman, Multimedia Development Corporation (MDeC) chief executive officer Datuk Badlisham Ghazali and George Newstrom, the chairman of the World Information Technology and Services Alliance (WITSA), the consortium of over 70 national ICT associations.

According to a statement, the agreements signed yesterday involved the following: # Cisco International and Knowledge Economic City Al Madinah of Saudi Arabia are creating iTopia to provide services in the area of content and einfrastr ucture.

# Mimos Bhd and Microsoft Malaysia will create the Microsoft Innovation Centre (MIC) at Mimos Technology Park to accelerate local software innovation leveraging on the research and development work at Mimos using technologies and knowhow provided by Microsoft.

# India-based Sunil Mantri Group is joining hands with MSC Cyberport Sdn Bhd to develop the 150-acre MSC Cyberport City, a designated MSC Malaysia Cybercity in Kulai, Johor.

# Pikom, the Malay acronym for the Association of the Computer and Multimedia Industry Malaysia, and 10 companies will help bridge the digital divide through a project called “Projek Menguasai Aplikasi Internet dan PC”.

# Iskandar Regional Development Authority Malaysia (IRDA) and MDeC will cooperate to market and promote incubator programmes and generic development ideas.

At the recently-concluded 11th MSC Malaysia IAP Meeting, another US$1.3 billion (RM4.22 billion) worth of investments were sealed, the statement added.

International Data Corp’s (IDC) Economic Impact Study 2007 report said that the information communications technology industry will contribute up to RM17.6 billion to the country’s economy over the next four years.

By New Straits Times

For Detail Information, please visit the Official Website: http://www.wcit2008.org