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Friday, February 29, 2008

E&O plans luxury homes in IDR

It's finalising joint venture details with KFH

PETALING JAYA: Eastern & Oriental Bhd (E&O) is exploring the possibility of a high-end residential property development in the Iskandar Development Region (IDR).

The company signed a memorandum of understanding (MoU) with Kuwait Finance House (M) Bhd (KFH) for the development of a 195-acre in the IDR in mid-February.

E&O managing director Datuk Tham Ka Hon in an e-mail reply to StarBiz said details were being finalised for the proposed joint-venture development with KFH.

“The MoU provides for a six-month period for both parties to sign the joint-venture agreement,” he said.

E&O signed an MoU with Cultural Cluster Sdn Bhd, a subsidiary of KFH, in mid-February to jointly develop the parcel, which is designated as the Heritage District within the 624-acre Cultural Cluster of Node 1.

KFH - together with Khazanah Nasional Bhd and Jumeirah Capital - were awarded a 99-year leasehold concession last August to develop the Cultural Cluster.

Tham said the development would be in line with the group's strategy of developing premium properties with unique concepts to meet the needs of the discerning segment of the market.

He said the group was in a stronger cash position following the sale of its 50.6% stake in Putrajaya Perdana Bhd for RM199mil.

“Assets amounting to RM1bil have been identified within the group that will be maintained as investments from which we'll be able to enjoy recurring income as well as capital appreciation,” Tham said.

He added that these included retail and office properties in the Klang Valley and Penang.

The group also plans to expand its hospitality and lifestyle division in Penang with the addition of 150 rooms to the Eastern & Oriental Hotel and 50 rooms to the Lone Pine hotels while 60 serviced apartments from the Suites at Waterside project in Seri Tanjung Pinang would be eventually managed by the E&O Hotel, he said.

Meanwhile, E&O's results for its third quarter ended Dec 31 saw the company posting a net profit of RM89.63mil.

This is largely due to a one-off gain from the disposal of the Putrajaya Perdana stake. Revenue was at RM86.61mil.

It also announced a special dividend less 26% income tax.

Analysts said the group's outlook remained bright although there was a 49% fall in its third-quarter revenue compared with the second quarter because new projects were not launched.

For the nine months ended Dec 31, there was a decline in revenue largely due to the absence of revenue from Putrajaya Perdana.

Hwang-DBS Vickers Research Sdn Bhd analyst Tan Siang Hing said in a research note that “the strategy of focusing on property investment allows the group to generate recurring income that should improve its earning quality.”

In another research note, Kenanga Research said despite a drop in revenue there was a 12% growth in sales in the nine months to Dec 31.

This was partly driven by a 53% increase in revenue from the hospitality business and increased take-up rates and more launches from Seri Tanjung Pinang.

It said estimated net profit for the financial year ending March 31 (FY08) would be revised down by 23% to RM140mil to account for the third-quarter result, which was below market expectations.

The outlook for the fourth quarter would be much stronger due to RM217mil in unbilled sales.

By The Star (by Fintan Ng)

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