Melati moving into property development

KUALA LUMPUR: Having made its name in the construction services industry, Melati Ehsan Holdings Bhd intends to move into property development to diversify its earnings.

“Construction services are currently the group's main contributor. However, we are always on the look-out for ways to enhance our income stream,” managing director Datuk Yap Suan Chee told StarBiz in an interview.

Datuk Yap Suan Chee

Listed on the Bursa Malaysia main board last March, Melati will be developing its sole plot of land in Pandamaran, Klang soon. The 100-acre land was purchased from Bank Negara unit, TPPT Sdn Bhd, for RM32mil cash, Yap said.

The development, which has an estimated gross development value of RM500mil, will comprise about 500 gated residential units, 320 shop lots with 8.97 acres of commercial units and 6.92 acres of industrial units.

Executive director Tan Hong Hing said apart from diversifying its income base, venturing into property development would enable the group to command higher margins.

“We will be able to reap the profit twice. The first being the developer of the project and second, for construction of the property,” he added.

Tan said Melati would continue to accumulate strategic land bank with residential and commercial property development potential.

Yap said the group was currently at the planning stage and had not started developing the land.

To a question, he said he foresaw a slight delay in the project due to the transition of power in the Selangor government but added that it would not be a major problem.

“We will be having meeting with the state government in due course,” Yap said.

Melati's construction division had been growing steadily over the years, even during the financial crisis, because of its ability to complete projects on time and within budget.

Melati's order book now stands at RM1.7bil, which will keep the company busy for three to five years. To sustain growth, it has tendered for projects amounting to over RM1bil.

“We are still aggressively bidding for more contracts and are confident of increasing our order book.

“The bulk of our projects are local, but if the opportunity arises and the projects overseas are commercially viable, we would consider them,” Yap said.

Recently, the group clinched the job for the construction of Carrefour hypermarket for Magnificent Diagraph Sdn Bhd in Kota Damansara, Selangor.

The company, which has one flood mitigation project in hand, has bid for similar jobs in Johor Baru.

On its financial performance, Yap said the company hoped to perform better in the financial year ending Aug 31.For the year ended Aug 31, 2007, Melati posted a net profit of RM27mil on turnover of RM173.4mil.

By The Star - StarBiz - (by Leong Hung Yee)