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Tuesday, May 26, 2009

Megamall owner to focus on internal operations

KRISASSETS Holdings Bhd, the owner and operator of Mid Valley Megamall in Kuala Lumpur, will focus on its internal operations this year to maintain its financial performance.

In the year ended December 31 2008, it made a net profit of RM98.12 million on the back of RM216.63 million revenue.

Group managing director Robert Tan Chung Meng said the company has put on hold earlier plans to inject new foreign retail and commercial assets into the company. At that time, property prices, particularly in the US, had plunged and made it an attractive investment option.

Given the unpredictable economy, the fluctuation of the stock market and foreign exchange, KrisAssets has decided to tread carefully. Nevertheless, even taking over an ongoing project remains an option if the price is irresistible.

Speaking at a press conference after the company's annual general meeting yesterday, he said KrisAssets has the muscle to consider one large project for merger and acquisition purpose, as long as it did not have the effect of increasing borrowings by too much.

On the performance of The Gardens Mall, which is planned to be injected into KrisAssets when it achieves profitability, Tan said the high-end mall was doing better than in 2008.

Although he expects gestation for The Gardens Mall to possibly even take up to five years, he is still hopeful that it will start making money faster.

"The one to two year (timeframe to inject Gardens Mall into KrisAssets) is still on our roadmap. We want to unlock its value," Tan said.

KrisAssets is 74.81 per cent owned by IGB Crop Bhd. IGB now owns the Gardens Mall which has a net book value of RM625.67 million.

On whether rental collection has been an issue, Tan said that it is not to the extent that it has an impact on its performance. The mall is also working with its tenants to help them through the challenging times.

Meanwhile, for the first quarter ended March 31 2009, revenue at the RM1.75 billion mall grew by 6.7 per cent to RM56.5 million from RM52.95 million.

Net profit increased by 14 per cent to RM25.4 million from RM22.3 million in the previous corresponding period as total rental income improved while it incurred lower property maintenance cost.

By Business Times (by Vasantha Ganesan)

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