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Wednesday, June 17, 2009

KYM to sign RM300m medical hub deal soon

The medical complex project in Malacca is expected to see KYM back in the black as early as next year, says KYM group managing director

Property developer KYM Holdings Bhd is expected to sign an agreement as early as next week to help build a RM300 million medical complex in Malacca, its group managing director Datuk Raymond Chong Thin Choy said.

"Construction of the medical hub should start by early next year," Chong told Business Times in an interview.

The federal government-funded project, under the Ministry of Health, will include construction of a state health administration centre, nursing institute and public health laboratory.

KYM, controlled by Datuk Lim Kheng Yew, will have 70 per cent stake, while its partner in the venture, Yayasan Melaka, a state government agency, will hold the remaining 30 per cent.
The project is expected to see KYM back in the black as early as next year, said Chong.

"We are targeting to break even in the financial year ending January 31 2010 and rake in sustainable profits from 2011 onwards."

KYM last reported a profit of RM28.7 million in 2006.

Its return to profitability and planned transformation from property developer to infrastructure player hinge largely on the sale of its landbank in Perak to Brazil's Vale SA, the world's biggest iron ore producer.

Completion of the multi-million-ringgit deal will help KYM degear itself, bringing its gearing ratio to as low as 0.41 time, or RM29.08 million, from the current 8.94 times, or RM209.73 million, while its net tangible asset is poised to rise to 89 sen a share from 29 sen.

The metal producer, which intends to pump in as much as RM9 billion into the Perak economy, has agreed to buy land in the silver state from KYM for RM101.9 million.

Vale also has an option to buy more land from KYM for RM93.7 million.

"It's truly a godsend," said Chong, adding that KYM is hoping to get as much as 10 per cent, or RM900 million worth, of the construction contracts on offer by Vale.

Securing RM900 million worth of jobs could help keep KYM busy for the next three years. Vale is expected to start developing the land as early as next year.

Chong also said that KYM in-tends to venture into quarrying in Perak to complement Vale's operational needs.

By Business Times (by Francis Fernandez)

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