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Thursday, March 20, 2008

LBS to launch projects worth RM5bil in China

PETALING JAYA: LBS Bina Goup Bhd expects to launch property development projects in Zhuhai, China, with an estimated gross development value of more than RM5bil by year-end.

Managing director Datuk Lim Hock San said the projects would include high-end bungalows and apartment units and he expected a good take-up due to strong demand for such properties.

Datuk Lim Hock San

“Zhuhai is a good location. Our site for the projects is near the LRT station and this has increased the value of our land,” he told reporters after the company EGM yesterday.

A bridge linking Hong Kong, Macau and Zhuhai was also in the process of being firmed up by the relevant governments, he said, adding that the Macau tourism industry was also expected to have a spill-over effect on its property projects.

Yesterday, LBS shareholders approved the proposed renounceable rights issue of 175.03 million new warrants.

Lim said demand for property in China was still high and consumer spending had remained firm. He was confident that the group's revenue would be boosted by its China property development by end-2009.

Locally, LBS was focusing on medium-to high-end properties due to higher building materials costs, including steel bars and cement, he said, adding that it planned to launch more mixed development projects this year in Bandar Saujana Putra and Taman Tasik Puchong, as well as industrial properties in Puchong.

On RAM Ratings' move to put LBS RM65mil secured serial bonds and RM100mil commercial papers programme on Rating Watch, with a negative outlook, on concerns about the company's deteriorating business and financial profiles, Lim said the company's projects had been delayed due to higher building material costs.

He added that other companies' outlook had also been affected by the weak consumer sentiment and uncertainties after the recent general election.

“However, in the medium to long term, the property outlook is still good and we expect things to stabilise in another month or two,” he said.

RAM had on Tuesday placed the A2(s)/P1(s) ratings on LBS due to its deteriorating business and financial profiles, arising from its continuous poor performance and persistent deferment of planned launches in the last few years. According to the rating agency, LBS had been supplementing its income with land sales over the past year – a measure that was not deemed sustainable and further highlighted the group's weakened fundamentals.

By The Star

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