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Saturday, May 10, 2008

Magna Prima plans RM1b project

EARNINGS BOOST: Lim at the launch of the company’s latest project in Selangor, U1 Shah Alam.

PROPERTY developer Magna Prima Bhd will launch a RM1.1 billion project in Kuala Lumpur by July, which will boost its earnings significantly next year.

The yet-to-be-named project will be located on a 4.12ha site at Jalan Kuching, said chief executive officer Lim Ching Choy.

"We expect good sales contributing positively to earnings. Our other projects like the six-star Avare condominium at KLCC and Dataran Otomobil township in Shah Alam have garnered us with good returns," Lim told Business Times at the launch of its latest project in Selangor, dubbed U1 Shah Alam, yesterday.

The new project will have two high-rise serviced apartment blocks, a hotel, a retail mall, 200 units of offices and 20 units of three-storey shops.

For the year to December 31 2007, it posted a higher net profit of RM26.9 million compared with RM93,000 in 2006, largely due to sales from Avare and Dataran Otomobil.

Magna Prima plans to sell the Jalan Kuching properties, which will be completed by mid-2011, and retain the mall for rental income.

Meanwhile, Magna Prima is building U1 Shah Alam, a residential and commercial development, for RM135 million.

It will comprise a twin 16-floor tower with a combined 378 apartment units, 13 retail outlets at ground level, a six-storey carpark, and an adjacent 15-storey office tower.

Magna Prima is looking for a buyer for the office tower which is worth RM45 million.

"We have started to market the product as we are keen on an en-bloc deal," said Lim, adding that it has yet to receive offers for the property.

The selling point for U1 Shah Alam is the location with easy access points and its convenience where tenants could also work and shop there.

The apartments are either two-plus-one bedroom units or three bedrooms, with sizes ranging from 980 sq ft to 1,100 sq ft, priced from RM200,000.

The office suites range from 1,057 sq ft to 1,348 sq ft with prices starting from RM350,000 each.

"Block A of the apartment tower was sold out one week after the soft launch on Monday. As for Block B, we have sold up to 40 per cent and expect to sell the rest within a month," Lim said.

By New Straits Times (by Sharen Kaur)

Asian Finance Bank to tap Islamic property fund mart

JAKARTA: Asian Finance Bank, one of three foreign Islamic lenders in Malaysia, plans to set up an Islamic property fund of up to US$500 million (RM1.6 billion) in 2009 to tap what it considers an undervalued market.

The bank, owned by Qatar Islamic Bank, RUSD Investment Bank Inc of Saudi Arabia and Global Investment House of Kuwait, also plans to set up a fully-fledged Islamic bank in Indonesia by 2010 as part of its effort to make inroads into Asia.

Faisal Alshowaikh, chief executive of Asian Finance Bank, said in an interview the property market was relatively subdued following the global credit crisis, but he saw potential for a property fund in Malaysia.

"Right now the property market has suffered from sub-prime, so it is not something I would pursue aggressively," he said, referring to defaults on low-end mortgages in the United States that have rattled markets worldwide.

"But this is something we have in our minds to set up. When you look at Indochina and other countries like Korea, Singapore, Hong Kong, I think the property market is very much undervalued in Malaysia."

The global Islamic finance market is one of the fastest growing in the world. Islamic assets are growing at an annual pace of 20 per cent and are set to hit US$2 trillion (RM6.4 trillion) in 2010 from the current US$900 billion (RM2.9 trillion), thanks largely to a flood of petrodollars, Ernst & Young said in February.

Asian Finance Bank currently has a representative office in Indonesia, a country analysts say has the potential to become a major player in global Islamic finance because around 85 per cent of its population is Muslim.

"It is a big market for Islamic banking which needs to be aggressively explored," Faisal said on the sidelines of an Islamic banking conference in Jakarta.

"We have plans to make this representative office into a fully-fledged Islamic bank in Indonesia. In this part of the world, with a population at 229 million - and a relatively small percentage of the market here is Islamic - I believe we can do more on the retail side and do more on wealth management."

Indonesia's Islamic finance market lags neighbouring countries Malaysia and Singapore because of tax and accounting framework issues.

But analysts expect syariah financing to take off after Indonesia's parliament passed a long-awaited syariah finance law last month.

Indonesia's central bank says the Islamic banking industry in the world's most populous Muslim nation is set to meet its target of a 10-15 per cent share of national banking assets by 2015 from less than 5 per cent now.

Asian Finance Bank was incorporated in Malaysia in 2005 and aims to develop a regional banking network providing a wide range of services.

The chief executive said the bank would like to establish representative offices in Singapore and Brunei, with its Kuala Lumpur office servicing China, South Korea, Vietnam, Myanmar, Laos and Cambodia as it moved to expand its Asian presence.

The bank's website says Qatar Islamic Bank is its biggest investor with a 70 per cent share in the company. RUSD Investment Bank Inc has 20 per cent and Global Investment House has 10 per cent.

By Reuters

IJM Corp in advanced talks for RM5b jobs

IJM Corp Bhd, which has a construction order book of RM6.5 billion, is believed to be in advanced stages of negotiations for an additional RM5 billion worth of construction work.

Half of this is for overseas work, Credit Suisse said in a report after meeting the company's management.

In addition, the construction and property development group is still in the running for a RM4 billion inter-state water transfer project, it said.

Credit Suisse maintained its "outperform" recommendation on IJM stock, but lowered its target price by 10 sen to RM8.30.

This suggests a 37 per cent upside from the closing price of RM6.05 yesterday.

At least 12 other research firms also have positive calls on the stock.

Credit Suisse also cut IJM's net profit forecast marginally, by one per cent to three per cent, for this fiscal year right up to 2010 to allow for a slightly lower construction profit margin.

This is because IJM's management had indicated that cost-inflation, particularly for steel, had caused some erosion in construction profit margin.

"However, we expect the potential impact to be merely RM20 million to RM25 million.

"Management expects sustainable construction pre-tax profit margin of over eight per cent in the longer term," the foreign research house said in its report on Thursday.

"Management also said that half of IJM's construction order book, currently at RM6.5 billion, has cost-escalation clauses that allow for cost-inflation to be passed on to clients," it added.

IJM is expected to release its results for the financial year ended March 31 2008 on May 27.

Last year, it made a net profit of RM194.3 million.

IJM is an attractive stock because its property restructuring, which includes a capital repayment of 50 sen a share, is expected to be completed in the third quarter of this year.

"We understand that management also plans to divest some of its low-yielding property assets and Indian toll concessions.

"Cash raised could be distributed as dividends," it added.

By New Straits Times

Ceiling price for steel abolished

The government has agreed to abolish the ceiling price of steel beginning next week.

Prime Minister Datuk Seri Abdullah Ahmad Badawi said the cabinet made the decision in view of numerous complaints about the high price of steel, particularly billets and steel bars and difficulties in getting supply at the ceiling price.

Abdullah said the world price for steel was much higher than the local market. This affected the country’s construction industry and could also slow the implementation of development projects.

The government thus agreed to adopt three liberalisation measures.

Abdullah said the cabinet agreed to scrap the ceiling price to enable contractors for government projects to apply for changes in the contract price based on the market price for steel.

The government also agreed to exempt steel importers from applying for import licences. They would then be exempted from paying import duties.

Abdullah also said local steel producers or entrepreneurs can now export their steel-based products.

The steel products involved are billets (7207 11 900, 7207 12 900, 7207 19 900, 7207 20 910, 7207 20 990) and steel bars (7214 10 110, 7214 20 910).

He said the measures were in line with the government’s aim to make sure national development would take place as planned.

These would also make the market for steel-based products more efficient and transparent.

The measures will take effect on Monday.

Diversified steel group Ann Joo Resources Bhd executive director Datuk Lim Hong Thye welcomed the move.

“When the market is opened, it will be a fair game to all, whether steel millers or contractors,” he said, adding that there should also be a mechanism to ensure that only quality steel was imported into the country.

Stock analysts said the move was positive for the steel sector as well as those in construction and property development.

It should promote market efficiency and transparency.

“There will be less ambiguity in steel prices, which is important for small contractors when they bid for contracts,” an analyst from AmResearch said.

“Without clarity in steel prices, contractors will lack confidence when pricing their bids.” Most steel stocks rose yesterday ahead of the announcement as several ministers had signalled the move in the past weeks.

Southern Steel gained 3.7 per cent to RM3.06 on Bursa Malaysia yesterday, while Malaysia Steel Works added 2.3 per cent to RM1.78.

Meanwhile, shares of Ann Joo Resources rose 1.6 per cent to RM3.82.

By New Straits Times (by Hamidah Atan and Chong Pui Koon)