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Saturday, December 20, 2008

SunCity riding on cashflow management

Sunway South Quay is promoting a new international metropolis in the Klang Valley

SUNWAY City Bhd’s (SunCity) sound cashflow management and strong balance sheet will see the company through the challenging property market conditions brought about by the global financial crisis.

Its portfolio of niche developments and property investment assets, as well as its increasing foray into the international property market will help cushion the company from the adverse impact of the crisis.

With RM560mil in cash reserve, it is looking to pick up some good distressed assets, including land, that will come in handy when the market bounces back.

SunCity managing director for property development Ngian Siew Siong says that in the past six months, the company had gone ahead with the launch of the South Quay project in Bandar Sunway and Vivaldi condominiums in Kiara Hills.

“We are going full swing with our best-selling projects in prime locations that have a large international community and expatriates. These include Sunway Palazzio luxury condominiums in Sri Hartamas, BayRocks Garden Waterfront Villas in Sunway South Quay, Villa Manja semi-detached houses in Sunway SPK Damansara, and Challis Damansara in Sunway Damansara,” he says.

Going forward, there will not be any new project startups except for sub-phases in ongoing projects.

The company still has RM1bil worth of projects in the pipeline from recent launches which will keep it busy for the next one year.

Ngian says SunCity’s strong unbilled sales of RM1bil will sustain the company’s bottom line over the financial years ending June 30, 2009 and 2010.

The company is also cushioned against the difficult market conditions by its exposure to investment property which contributes about 50% to its bottom line. Besides a good spread of medium to high-end residential projects in multiple locations, SunCity also has a portfolio of high-yield investment assets that provide steady recurrent income streams that are also more recession-proof.

To take advantage of the prevailing low construction costs and ride on the market recovery in the next three years, it will focus on high yielding projects next year, including a new corporate office building located beside Menara Sunway. Another is a small office home office cum retail project, called Sunway Pyramid 3, which will be the extension of the Sunway Pyramid shopping mall.

“We see the current situation as a good opportunity to prevent an overheated and over-competitive market. This is the time for us to focus on re-engineering some of our strategies, our processes and human resources, as well as improve customer services and loyalty programmes.

“SunCity’s growth these one to two years will be primarily driven by its ongoing and planned projects in the Klang Valley, Ipoh and Penang, as well as those located in India, China, Cambodia and Vietnam. With more than 12 active projects in Malaysia and overseas, we look forward to tread steadily despite the challenging market conditions,” Ngian says.

Having survived three market downturns, its ability to ride out those difficult times is testimony to its hardiness and competitiveness to stay ahead of the pack.

“It is a challenging time for developers as they need to deliver world-class products without compromising on product quality and specifications. As construction costs have came off their peak around June, it is now up to the developer to either maintain the property prices at current levels or pass on the cost advantage to the customers.

“It is prudent for industry players to weigh the market demand and supply situation before deciding on the price of their products,” Ngian points out.

By The Star

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