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Thursday, April 3, 2008

MPHB makes property thrust

MULTI-PURPOSE Holdings Bhd (MPHB) will use cash from the privatisation of its gaming subsidiary Magnum Corp Bhd to venture into property development in a bigger way, its top official said.

The move will provide the group with a new earnings stream as it seeks long-term growth, managing director Datuk Surin Upatkoon (pic) said.

He said MPHB, which stands to get up to RM731 million from the privatisation exercise, already has two hectares of prime land along Jalan Sultan Ismail in Kuala Lumpur on which it is planning a commercial development.

The group expects to obtain the planning approval for it by year-end. It also wants to increase its landbank in Malaysia and has the first right of refusal to buy land owned by Magnum.

"It's still premature to say how much of the proceeds we'll use for property development, (but) it'll be one of our core businesses and will start contributing to the group from 2009 onwards," Surin told reporters after shareholders gave their approval for the privatisation yesterday.

The Magnum buyout, which MPHB is undertaking with global private equity firm CVC Capital Partners Asia III Ltd, is expected to be completed by June this year, he said.

MPHB is now on the brink of a growth phase after successfully cutting debt to some RM200 million today from a peak of over RM2 billion about five to six years ago.

It derives the bulk of its earnings from gaming, but also does insurance and stockbroking.

Surin expects MPHB to do well this fiscal year but warned that it will probably not be able to match last year's strong performance, where net profit more than quadrupled to RM571 million.

Shareholders can nevertheless expect to get a higher dividend than the 11 sen a share that was declared last year, he said.

The gaming business is expected to grow by between three per cent and 3.5 per cent this year, while insurance is targeted to grow by about 14 per cent to RM320 million.

The group may sell its insurance business if a good offer comes by, Surin said. It is currently in talks with a local insurance firm which has a foreign shareholder.

"We're not in a hurry to dispose it. We could also go for a merger," he remarked.

As for gaming, the group has no plans to expand into the region as yet. It has been "business as usual" in states like Kedah where the opposition Islamic political party recently wrested control.

By New Straits Times (by Adeline Paul Raj)

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