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Monday, June 30, 2008

Growing shortage of materials a main concern for housing industry

Some of the houses in Bandar Saujana Utama

With spiralling construction costs and more than a dozen ongoing projects to complete, Glomac Bhd group managing director Datuk F.D. Iskandar has every reason to be concerned.

He is not alone in this predicament, for the whole housing and construction industry is facing the same problem.

As vice-president of the Real Estate & Housing Developers' Association (Rehda), Iskandar has also received many complaints from members that contractors have asked for an upward revision of their contract prices.

Some have even refused to participate in new tenders while others have threatened to walk away.

The industry is also faced with a growing shortage of certain raw materials like steel.

“The 9th Malaysia Plan (9MP) has not even started and there is already a big shortage of steel which has seen prices skyrocketed from RM2,350 per tonne to RM4,000 per tonne,” he said, adding that the big projects under the 9MP would need a lot of steel.

China, Iskandar said, was believed to be consuming a third of the global supply of steel for its Olympics projects and China's demand for steel was expected to go up with the massive reconstruction of Sichuan Province after the devastating earthquake in May.

He said Rehda, the International Real Estate Federation (Fiabci) Malaysia Chapter and Master Builders Association of Malaysia had made representations to the Government to allow controlled items like steel to be an open item with no ceiling prices.

Rehda has urged the Government to also abolish its decision to charge 10% import duty on cement importers and instead impose 10% to 20% export duty on all cement and steel materials to ensure adequate supply.

Iskandar said it was “a joke” that despite being a steel exporting country, Malaysia still faced a shortage of steel while contractors in Singapore could buy steel at a cheaper rate.

He said with soaring inflation, people would have lesser disposal income and might hive off purchase of properties.

Iskandar said the Government had given the “green light” for Fiabci Malaysia and Rehda to help promote Malaysian real estate to foreign investors under the Malaysia Property Incorporated scheme.

“We are still brain-storming. Malaysia needs to re-brand itself, be more transparent and attract more foreign investments,” he added.

By The Star

A thriving Bandar Saujana Utama

Herbert Leong with a model of Bandar Saujana Utama

BANDAR Saujana Utama in Sungai Buloh has matured into a thriving township with about 6,000 housing units built since the project began in 1995.

Unlike some suburban townships where there are still many vacant houses, Bandar Saujana Utama is more than 90% occupied and now has five precincts called SU1, SU2, SU3, Bukit Saujana and Sungai Buloh Country Resort (SBCR) that were the first to be developed more than a decade ago.

Purchasers who initially bought double-storey terrace houses there for RM90,000 have enjoyed good capital appreciation as new launches are now priced RM230,000 to RM250,000.

In the early 1990s, visitors to the township have to exit the Sungai Buloh toll plaza of the North-South Expressway and drive along Jalan Kepong-Kuala Selangor before reaching SBCR. Visitors have to pass through a narrow road leading to SBCR that was jointly developed by Glomac Bhd and the Farmers' Association of Kuala Selangor.

Today, there is a new access road via the Batu Arang-Shah Alam Highway while the Guthrie Corridor Expressway has also helped to open a new growth corridor.

I recall visiting the resort several times in the past where carnivals and horse-riding shows were held at the equestrian. There was also a small wooden “clubhouse” at the equestrian, some show bungalows and Saujana Utama houses were just being built.

Today, the area is unrecognisable, as the township has blossomed into one of the more desirable places to live in Sungai Buloh.

Although much of the forests and plantations had made way for houses, the country-like ambience is still there. The place is very quiet and breezy.

Over the past decade, several housing estates have mushroomed on both sides of this Batu Arang-Shah Alam Highway. They include Perdana Heights, Alam Budiman, Sunway Alam Suria, Cahaya SPK, Kayangan Heights and Sunway Kayangan.

Opposite this townships are Seri Pristana, a fairly new housing estate, and the 1,000-acre Universiti Teknologi Mara (UiTM) in Puncak Alam that would be a catalyst for the further growth of Sungai Buloh.

Bandar Saujana Utama will benefit from the housing needs and economic activities of the campus.

Phase 1 of the UiTM campus is expected to be completed by 2009 and will house 20,000 students. The expected total student and staff population upon completion is about 50,000. Nearby developments along the Sungai Buloh Road includes the Desa Coalfield (8km away), and Puncak Alam.

Meanwhile, the estimated 30,000 residents (80% Malays, 10% Indians and 8% Chinese) of Bandar Saujana Utama have reasons to be pleased, as they have got their first hypermarket and an upcoming neighbourhood mall in the township.

The 50,000-sq-ft Central Mart hypermarket that initially leased the building from the developer had within a year bought it in April, reflecting its confidence in doing business in the 1,100-acre leasehold township. The SU Mall next to Central Mart is almost completed.

Glomac Bhd general manager (Group A) Herbert Leong said 65% of the 72 retail lots in SU Mall had been sold since sales began 15 months ago. A typical lot size is 40ft by 40ft and is priced from RM270,000 to RM500,000.

“This is the biggest retail complex in the area. The mall is scheduled for completion by August and we hope to get the tenants in by year-end. The Central Mart and Ace Hardware is the only hypermarket within 15km radius,” he said.

The earlier house designs are average looking. However, Glomac is coming up with new designs in Bukit Saujana, a new precinct sited on higher grounds. Bukit Saujana's first phase will have 94 semi-detached houses with 45ft by 80ft units with typical built-up sizes of 2,467sq ft and priced from RM425,000.

Another 87 double-storey terrace houses with 24ft by 70ft and 24ft by 75ft lot sizes and built-up area of 1,845 sq ft and 2,214 sq ft respectively would be priced from RM260,000.

Glomac will also be offering bungalow lots with average area of 8,000 sq ft and an option to build a bungalow with 3,200 sq ft built-up area and priced from RM600,000. There is a new police station, a primary and a secondary school as well as a clubhouse for SBCR residents. A mosque and wet market are in the pipeline.

About 50 bungalows have been built in the gated and guarded SBCR where only 30 of the 550 bungalow lots remained unsold. The 85 double-storey shops and 119 single-storey shops are 85% and 95% occupied.

Glomac Bhd group managing director Datuk F.D. Iskandar F.D. Mansor said Glomac had increased its land bank in the township over the years. “Of the 1,100 acres, we are now left with about 300 acres yet to be developed,” he said.

It has sold about RM900mil worth of properties out of a gross development value of RM1.35bil.

By The Star (by S.C.Cheah)

Piccolo Hotel KL hitting all the right notes

STRATEGIC LOCATION: An artist's impression of the Hotel Piccolo building on Bintang Walk

PICCOLO Hotel Kuala Lumpur may have set a new benchmark for new four-star hotels in the city centre by filling up half of its available rooms and achieving RM255 in average room rate (ARR) in just a month after its opening.

At the current pace its business is going, the hotel expects to break even within two years.

The hotel, formerly Wisma Peladang, is owned and managed by Absolute Prestige Sdn Bhd, which has taken a 60-year lease on the building beginning 2002. Berjaya Land recently acquired a 51 per cent stake in Absolute Prestige.

The leased structure includes the hotel and a commercial component. An annexe tower comprising 70 rooms will be ready next year. The cost of all the components is RM70 million and RM45 million for the lease.

"We have achieved RM255 in ARR and 50 per cent occupancy based on available rooms. A huge portion are walk-in guests," Absolute Prestige executive director Suzianna Wong-Svrcula told Business Times in an interview.

MARINE INSPIRED: Wong-Svrcula in one of the rooms. The hotel strives to be as environmentally friendly and energy-efficient as possible

The hotel opened in mid-April with 60 rooms and was supposed to open the remaining 108 rooms in June.

"In the first year of operations, we are targeting RM250++ (in ARR) and an average occupancy of 50 per cent," Wong-Svrcula said.

"We target to break even in the second year with 70 per cent average occupancy and an ARR of RM280 to RM300 per night," she added.

The projections are achievable, given Piccolo Hotel's strategic location on Bintang Walk and its focus on room operations only. The retail space, spa and restaurants of the building are not operated by the hotel.

The hotel's tagline is "Dive Into Pleasure", based on its theme of marine life.

The carpeting in the hotel carries the anemone design, while the curtains has a shimmer which look like moving water.

Each room displays pictures of the underwater world and photographs are hung on the walls along the corridors, creating the the impression of walking through an art gallery.

This marine-inspired hotel strives to be environmentally friendly and energy efficient.

Hot water is produced through heat exchange generated from the air-conditioners and the hotel's power supply uses high-tension power which helps save up to 28 per cent in rates.

In fact, the hotel has no swimming pool as it considers that a waste of resources.

Whatever is saved on laundry - sheets not changed for those who stay more than one day - is donated to the "Safe Our Seahorses" and "Reef Check Malaysia" programmes.

Piccolo Hotel is also planning to make its working environment as paperless as possible.

By New Straits Times - Business Times - (by Vasantha Ganesan)

Y&Y development promises value

PROPERTY developer Y&Y Property Development Sdn Bhd is positioning its latest commercial development project, Shamelin Heights, as a value-for-money offering for business operators.

The group has invested some RM110 million in the development, which offers an opportunity for businesses to operate on bigger premises in a strategic location, yet at affordable rental rates.

Shamelin Heights offers 31 exclusive bungalows from 8,500 sq ft onwards, with a rentals starting from RM18,800 per month.

Targeted at light industrial business owners, Shamelin Heights is suitable for tenants to place their warehouse, gallery, research and development centre, service centre or healthcare centre, Y&Y Property project consultant Billy Tan said

TAN: Shamelin Heights is built to accommodate market demand for bigger business premises at affordable rents and located in the heart of Kuala Lumpur

"The development is built to accommodate market demand for bigger business premises at affordable rents and located in the heart of Kuala Lumpur," he said in a statement.

Tan said that under its "build-for-lease" concept, Shamelin Heights tenants can maximise profits by focusing on their businesses as the developer will take care of the maintenance and management of the premises.

By New Straits Times

Glomac gears up for challenges ahead

GLOMAC Bhd has, over the past 20 years, emerged from a mere township developer to become a niche, high-end property player.

The recent en bloc sale of its 40-storey Glomac Tower for RM577mil (a record breaking RM1,120 per sq ft), is another outstanding achievement for the Bursa Malaysia main board company.

Group managing director Datuk F.D. Iskandar F.D. Mansor said while going for more niche projects in the Klang Valley, Glomac was constantly improving its traditional mixed housing projects.

Datuk F.D. Iskandar F.D. Mansor

For example, the company has introduced a Balinese theme with Balinese style garden and pavilion by a lake for its 350-acre Saujana Rawang (next to Bandar Country Homes) and has generously landscaped the 450-acre Sri Saujana in Ulu Tiram, Johor.

Iskandar is passionate about Bandar Saujana Utama in Sungai Buloh, Selangor. It is this early flagship project that has positioned Glomac as one of the key pioneer players in Sungai Buloh's development in the mid 1990s.

“Moving forward, we would like to bring more amenities to Bandar Saujana Utama, which has within 10 years transformed from a God forsaken place into a very affordable and family-orientated place to live. It has become a thriving township with amenities and facilities.

“We're proud to develop this township which will have 9,000 mixed units. It is two-thirds completed and the houses are 93% occupied,” he told StarBiz.

He recalled how the company started off with the Sungai Buloh Country Resort (SBCR) that is now part of Bandar Saujana Utama. Bungalow lots were sold for only RM18 per sq ft then. Prices now hover around RM25 to RM28 per sq ft.

He said the equestrian project at SBCR had been scaled down and privatised to an operator that conducted horse-riding lessons.

Iskandar said the township had a new precinct, the 43-acre Bukit Saujana, where it planned to launch terraced (1,860-sq-ft built-up) and semi-detached houses (2,500 sq ft) tagged at a bumiputra price of RM238,000/RM248,000 and RM428,000/RM438,000 respectively.

“We're working with the Government to have more schools there. At present, many children from other areas come to study at our secondary and primary schools,” he said.

Meanwhile, Glomac, like all property development companies, are affected by the big jump in oil prices, inflation and rising construction costs. It is bracing for the worst.

“It's either we increase the prices of our products or reduce the built-up area. All our margins will be wiped out if we continue selling our 22ft by 75ft terraced houses at RM180,000 in Bandar Saujana Utama.

“Steel price was below RM2,000 per tonne less than a year ago. It has now gone up to RM4,000 per tonne and we will be lucky if we have enough supply,” he added.

It is understood that it would be inevitable for the company to raise house prices and also to give smaller built-up area for certain products.

However, Iskandar realises that he has to tread carefully with suburban township projects like Bandar Saujana Utama where the buyers are more price sensitive.

On its Sri Saujana in Johor, Iskandar said the township began in 1999 and was a third completed. It has sold RM400mil out of RM600mil worth of properties.

“We are facing a more challenging market in Johor. House prices in Johor are not going up as fast as those in the Klang Valley.

'There are about 50,000 Malaysians working in Singapore and many of them buy houses in Johor,” he noted, adding that the recent slowdown in Singapore had also affected market sentiments in Johor.

“However, Johor is slowly recovering and hopefully, the Iskandar Malaysia will spur further economic growth,” he added.

On its latest project the Glomac Damansara, Iskandar said it would be launched soon. The seven-acre freehold commercial-cum-residential development would have a gross development value of about RM600mil. It will comprise shop offices, serviced apartments, a small mall and an office tower.

“We will be launching the shop offices first. We bought the land about a year ago,” he said.

Its Sri Bangi gated project in Section 8, Bandar Baru Bangi, has also done well with all 63 units of shop offices sold within two weeks of launch in March. However, in view of the current market uncertainty, the launch of 230 terraced houses has been delayed.

“We will wait and see until prices stabilise,” said Iskandar.

Glomac currently has 10 ongoing projects and should have 14 projects worth RM3.3bil by end of this year.

However, it may review further launches if fuel prices and other costs continue to soar. Its focus is on smaller pockets of prime land for niche projects that have a fast turn-around and yield better returns for its shareholders.

Glomac has constantly been re-inventing itself through innovative products as seen in new projects such as the Plaza Kelana Jaya (newly completed and built next to a lake with large central courtyard), Plaza Glomac, Glomac Galleria (shop offices priced RM3.8mil to RM4.5mil) in Sri Hartamas and Menara Glomac.

Its successful upmarket residential projects like Suria Stonor and Suria Residen have set new benchmarks in quality and pricing. For example, Suria Stonor's initial price of RM650 per sq ft in 2005 has now breached RM1,300 per sq ft and is still rising.

“We hope to do slightly better than last year. We were still okay late last year. The challenges started from April this year,” said Iskandar.

By The Star - StarBiz - (by S.C.Cheah)

Cyberview: More jobs in the pipeline

CYBERVIEW Sdn Bhd, which has four contracts in hand in Cyberjaya worth in excess of RM200 million, is eyeing more jobs, said managing director Redza Rafiq.

"A few local and foreign information technology firms have expressed interest to move to Cyberjaya. Discussions are still in initial stages. We are planning to design and construct buildings for them according to their specific requirements," Redza told Business Times.

"We have 100.8ha in our pockets ready for development. The areas are suitable to build data centres and for high-impact companies to operate from," he added.

Cyberview is currently building a global delivery campus for Satyam Computer Services Ltd, a leading global consulting and information technology services provider, for RM100 million.

Its other contracts are to build a knowledge workers' development institute for the nation, a four-storey data centre for a prominent local firm, and park-and-ride facilities to improve the transportation system in Cyberjaya.

"Satyam is planning to relocate from its existing premises to a bigger space. We are building the campus in two phases. The first phase will be completed by September and the second, by March next year," said Redza.

The building of the 300,000 sq ft data centre, meanwhile, is part of the company's programme to encourage local firms to do business in Cyberjaya.

The data centre will be operational by year-end. Redza, however, declined to identify the company.

It is learnt that the data centre is being constructed for E-Basis Bay Sdn Bhd, a unit of technology services and hardware solutions vendor Basis Bay Group.

By New Straits Times

Cyberview to launch housing project in August

CYBERVIEW Sdn Bhd, a government-linked entity mandated to spearhead the development of Cyberjaya, will launch its flagship housing project, myHome@Cyberjaya, for more than RM150 million by August.

It will build 1,000 units of affordable apartments, double-storey houses and two- and three-storey shopoffices in two phases over a span of four years to cater to the needs of the Cyberjaya knowledge workers.

Managing director Redza Rafiq told Business Times in an interview that the apartments and houses will be priced from RM88,000 to RM168,000 respectively, while pricing for the shop-offices is still being planned.

REDZA: Cyberview together with the other major stakeholders of Cyberjaya are all hard at work to ensure Cyberjaya's position is firmly entrenched in the global ICT map

"The 11.63ha myHome@Cyberjaya project will be our first residential development. All the units will be uniquely designed by award-winning architects. As the development progresses, we will invest in new projects to build corporate buildings suited to clients' specific requirements. We will also construct international schools," Redza said.

The main objective of Cyberview is to ensure that the development of Cyberjaya adheres the government's guidelines and aspirations and to advise it on Multimedia Super Corridor/Cyberjaya development matters.

It has 100.8ha in its pockets, of which less than 32ha have been utilised or are being developed.

The land was given up by Setia Haruman Sdn Bhd, the master developer of Cyberjaya, under a revamp exercise.

In 1999, Cyberview signed a development agreement with Setia Haruman granting it the right to develop 2,832ha in Cyberjaya as the master developer in exchange for 8.5 per cent return on equity, while Cyberview became the landowner.

By 2002, the development model became unsustainable and had to be restructured.

Cyberview was asked to come in by the government to save the Cyberjaya project from being derailed due to Setia Haruman's high gearing and its inability to service its obligations to the tune of RM3 billion.

Cyberview had taken over a substantial portion of the obligations and helmed the restructuring exercise for the project, which phased the remaining amount to give Setia Haruman breathing space and to ensure the development of Cyberjaya will be continued.

The exercise was concluded in May 2006. Under the exercise, Setia Haruman gave up its sale and development rights over a 101ha tract of land to Cyberview for RM500 million.

Initially, Setia Haruman was equally held by UEM World Bhd, Country Heights Holdings Bhd (CHHB), Landmarks Bhd and Tan Sri Mustapha Kamal Abu Bakar's Emkay Group.

In 2004, Mustapha Kamal bought over the shares from CHHB and Landmarks for RM100 million cash resulting in Emkay gaining 75 per cent control over Setia Haruman. UEM holds 25 per cent.

"With the restructuring exercise, Cyberjaya was able to move forward again and now houses more than 400 local and foreign corporations. The amount of office space is expected to breach the five million sq ft mark before the end of 2010, from 3.7 million sq ft currently," said Redza.

Emkay, which is one of the bigger private developers in Cyberjaya, will alone offer 3.5 million sq ft of office space by 2011.

"Cyberview, together with the other major stakeholders of Cyberjaya such as Multimedia Development Corp (MDeC), Majlis Perbandaran Sepang and Setia Haruman, are all hard at work to ensure Cyberjaya's position is firmly entrenched in the global ICT map," added Redza.

By New Straits Times (by Sharen Kaur)

Piccolo operator plans to set up boutique hotel chain

The owner and operator of the Piccolo Hotel Kuala Lumpur, Absolute Prestige Sdn Bhd, plans to establish a boutique hotel chain in Malaysia.

The proposition is ambitious given that its Piccolo Hotel on Jalan Bukit Bintang is only two months old and the company's maiden foray into the hotel industry.

Nevetheless, realising its goal may not be too far off as Absolute Prestige has already been approached by other property owners who are keen to replicate its hotel model nationwide.

Piccolo Hotel not only showcases marine life and conservation in the hotel, but also strives to be as environmentally-friendly as possible.

"We are talking to parties and looking at the location. These are people who have existing properties that we can take over (and convert to hotels) around the country," Absolute Prestige executive director Suzianna Wong-Svrcula said.

"We want to share the beauty of the marine world and about conservation," she said, indicating that she would like to have a hotel in Kota Kinabalu, Sabah.

Should anything materialise, she expects it to be in 2009/2010.

"We believe we have an exciting product and hope to replicate it," she said.

In 2001, Absolute Prestige paid RM45mil for a 60-year lease on the 13-storey Wisma Peladang to turn it into a boutique hotel.

By New Straits Times

Upmarket challenge for Bolton

Chan posing in front of a Tijani home.

FOR decades, Kenny Hills has been known to be the home of the rich and famous. Be they corporate leaders, politicians, members of the royal families or someone with heaps of money, Kenny Hills drew them with her meandering tree-lined roads and mosquito-filled slopes.

But the community who lived there also treasured and protected what they have with passion. And because they had influence and power, Kenny Hills continued to remain green.

Several years ago, residents of Kenny Hills were up in arms when they discovered that certain parts of their beloved neighbourhood in Jalan Langgak Tunku would come under the bulldozer. Their concerns were natural as Kenny Hills, one of the most up-market residential urban living in the city, is also the last of the green bastion of modern city living.

Having a home here is equivalent to having arrived. There is nothing to upgrade to. With a benchmark as challenging as this, what can any developer offer that will appease the current community and at the same time, appeal to new buyers?

This challenge was presented to Bolton Bhd when it became one of the largest land owners there with 42 acres in the late 1990s.

Says Bolton executive director Chan Wing Kwong: “Kenny Hills is like a gentleman’s club. How exclusive can any developer be?”

It was a challenge they decided to take up. They took a second look at their plans, which at that time, was to be a high dense commercial, retail and residential area.

“We decided to adopt a more seamless approach, taking into consideration the current community. If anyone were to buy, our first catchment would be the community here,” says Chan.

Hence the governing rule was to consider the wishes of the community. The second thing they did was branding. Bolton had previously done two other high-end projects in the city, but nothing of this scale. That was when Bolton decided to put greater emphasis on branding. That led to the birth of the Tijani (crown in Arabic) brand. Bolton plans to use the brand Tijani for their upmarket projects across the country, eventually.

Says Chan: “We decided to focus on long-term value.”

Because Kenny Hills was like a gentleman’s club comprising the rich and their sons and daughters, relationships matter.

There is the old rich who made their money by the sweat of their brow. At least their fathers did. Now that they have their third generation, they too want their children to live close by. But the young rich did not want the cumbersome duties of having to look after a home on half an acre. (That’s the land area of some of the properties there).

That was when Bolton came up with a 3-in-1 strategy – the natural, modern tropical and modern minimalist – to meet the needs and demands of the community they were targeting.

Tijani 1, comprising 33 vacant lots, took on a natural theme. Its entrance was understated with lots of greens and land area between 13,000 and 54,000 sq ft (more than an acre).

A small house on a large piece of land – the definition of Kenny Hills homes and this was what the community lived by.

Bolton was targeting an audience who is used to living on large pieces of land. When Tijani 2 South came about, the concept changed to appeal to a community who wanted to downsize but who nevertheless, wanted an oasis of green to remain. Forty-four semi-detached homes were introduced in this modern tropical setting.

Needs and wants change with the season but some basic needs have to be respected. With emphasis on that, Tijani 2 North, with its 70 units of low-rise duplexes and 84 units of condominiums, was launched in 2005.

(Bolton will launch its low-rise block of eight storeys comprising 28 units before the end of the year at between RM1,000 and RM1,200 per sq ft in Tijani 2 North. There will be a Tijani 3 later on, which comprises 100 odd units of condominiums. Tijani 2 North was launched in 2005 at RM650 psf.)

“We are now appealing to the youngest generation. They may be buying with their own money, their father’s or grandfather’s money. They don’t want to maintain the grounds, they want to enjoy life and socialise. They are adventurous and don’t mind mixing with the neighbourhood. So we provide them with a clubhouse and other facilities,” says Chan.

Looking back, he says the single factor that gel this 3-in-1 strategy is relationships.

“Location, quality and being green are important but above all these lie the importance of relationships. But having said that, 30% of our buyers were foreigners. They know they cannot go wrong with this location.”

By The Star (by Thean Lee Cheng)

Construction sector seen as main loser

PETALING JAYA: The mid-term review of the Ninth Malaysia Plan (9MP) reveals that the construction sector appears to be the main loser due to cutback in spending.

CIMB Research in an update report said the review was neutral on most sectors as there were no strong commitments to spend on them.

“Food and beverage, oil and gas and building materials (sectors) were marginal winners,” it said.

A woman walking past a poster in George Town. The removal of both the Penang Monorail and Penang Outer Ring Road projects from the 9MP allocation was negative for the construction sector.

CIMB Research said the RM30bil increase in development expenditure to RM230bil was positive over the next 12 months for the building material sector, as part of the expenditure would address rising cost of materials.

“However, in the longer term, the outlook for building material demand is less optimistic given the reduction in construction spending,” it added.

The removal of both the RM2bil Penang monorail and RM1.5bil Penang Outer Ring Road project from the 9MP allocation was negative for the sector and outweighed the potential positives arising from the additional development budget, the research house noted.

CIMB Research remains “overweight” on the oil and gas sector due to the current overriding demand for energy but is “neutral” for the plantation sector.

“The Government's policy of expanding arable land and increasing food production, in view of the global increase in food prices, are expected to have minimal impact on the listed oil palm players in Malaysia,” the report said.

While it maintains its “overweight” rating for the telecommunications sector, CIMB Research has reduced its target price for Telekom Malaysia Bhd as it remains negative on the rate of penetration for the household high-speed broadband project.

“Although continued efforts would be made to push household broadband penetration to 50% by 2010, affordability and demand for such speeds from most residential customers are likely to be limited,” it said.

The research house noted that VADS Bhd and JobStreet Corp Bhd were clear beneficiaries in the technology sector as the review envisaged an increase in exports from Multimedia Supercorridor companies and an increase in information and communications technology (ICT) global players' investments in high-valued outsourcing.

“On VADS' part, it harbours the aspiration of being a local ICT champion while its core divisions should benefit from increased transactional flow from shared service outsourcing. Meanwhile, JobStreet will see a positive impact from the creation of more jobs,” it added.

By The Star (by Laalitha Hunt)

SP Setia to ride out tough times

SP Setia Bhd shares have been under pressure since the release of its latest quarterly results on June 24. Traditionally seen as a safe stock for investment, SP Setia's share price has dropped by more than 15% in just a week and it is now at its lowest level in 52 weeks.

The developer’s net profit fell 19.68% to RM47.99mil for the second quarter ended April 30 mainly due to escalating costs of building materials. Revenue, however, was slightly higher at RM301.5mil.

Despite the weak results, some brokerages are still upbeat on SP Setia's prospects.

Citi Investment Research said that despite weaker-than-expected results, SP Setia's management was still confident of meeting the RM1.5bil new property sales target for the current year ending Oct 31 (FY08).

“SP Setia has already achieved RM951mil sales for the first seven months of FY08 and if the company can maintain its sales of RM100mil per month, it should not be a problem to achieve the RM1.5bil sales target,” the research house said in a report.

It added that the only exception was Vietnam, where the company has a current sales target of about US$10mil for FY08.

“We believe the current sell-down is overdone. Previously, despite a lethargic market, SP Setia has been able to consistently chalk up at least RM1bil annual sales,’’ Citi said. “In our opinion, SP Setia is in a league of its own and would be able to withstand a more challenging environment than most of its peers.”

AmResearch has reiterated its “hold” rating on SP Setia with an unchanged target price of RM3.50 based on a 10% discount to its estimated net asset value per share of RM3.89.

In a recent research report, Kim Eng Securities retained a “buy” on the counter, with a target price of RM3.50. It said the stock offered attractive gross dividend yields of around 6% and that SP Setia had a good track record in delivering its promises.

By The Star (by Leong Hung Yee)