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Wednesday, January 28, 2009

High-end projects set to put Mulpha on profit track

MULPHA Land Bhd (MLB) (7889) is launching four high-end projects worth RM1.03 billion in Kuala Lumpur and Johor this year, in a bid to turn around.

MLB slipped into the red in the 12 months to December 2007, incurring a net loss of RM417,000 against a net profit of RM864,000 in 2006.

For the first nine months in 2008, MLB, the property arm of Mulpha International Bhd, posted a net loss of RM94,000.

Chief executive officer Lai Meng told Business Times in an interview that the way forward for MLB is to offer niche and sought-after products.
It is launching Bangsar Enclave in the next quarter, which features seven units of 3-storey villas in a gated and guarded community, worth RM70 million.

In the second half of the year, MLB will launch Menara Mulpha at Jalan Sultan Ismail, and a yet-to-be-named luxury development in Kenny Hills, offering eight unique villas with private pool, worth RM110 million, or RM15 million each.

Menara Mulpha is a 23-storey Grade A office building, worth around RM350 million. The property, which is the first iconic building with green features for the Mulpha Group, will be leased for recurring income, Lai said.

"These projects have strong unique product concept in superb locations and should provide impetus for growth. Nevertheless, we are mindful of the gloomy economic outlook and will adopt a cautious approach in our planning and execution," he said.

Also in the pipeline is Precinct 7 at MLB's RM1.2 billion Leisure Farm Resort project in Gelang Patah, located in Iskandar Malaysia, Johor.

It will offer 320 units of semi-detached homes and bungalows, surrounded by garden parks and canal waterways, worth a combined RM500 million.

"Precinct 7 will be developed in phases to enhance price positioning," added Lai.

MLB is also banking on its recently refurbished and restored project, opposite the Raintree Club in Ampang Hilir, to improve earnings.

Dubbed Raintree Residence, it has four semi-furnished 5-bedroom duplex penthouses, and eight units of 4-bedroom apartments, which will be leased.

"It will be our first rental product in Kuala Lumpur and should be favourable in this locality filled with expatriates and consulate staff," Lai said.

MLB's current projects are Bukit Punchor in Nibong Tebal, and Desa Aman in Padang Meha, Kulim, Kedah, worth RM706 million.

By Business Times (by Sharen Kaur)

TA Ent mulls best way to structure property unit's IPO

Stockbroking firm TA Enterprise Bhd (TAE) may delay plans to list its property unit on the local bourse for the second time, due to a weak stock market, industry sources said.

TAE, which has the Securities Commission's nod to list TA Global Bhd (TAGB) on Bursa Malaysia's main board by March, may list it in the second quarter in view of current market sentiment, a source told Business Times.

Its earlier target was to list TAGB by December 2008, later postponing it to March this year.

When contacted, TAE group managing director and chief executive officer Datin Alicia Tiah told Business Times that the group is still aiming to list TAGB by March or April, but the plan will be guided by market sentiment.
"While we are optimistic to list the property business, we want to be sure the timing is right especially when the world economy is in a depressed situation. TAE is expanding its property business and the listing will give it more recognition overseas as it expands," Tiah said.

She said TAE is talking to underwriters for the placement of the shares, and exploring the best way to structure the initial public offering (IPO) so that the market will be able to absorb the listing.

"Our approval has an expiry of six months. In the event we do have to delay the IPO, we can always apply for an extension," Tiah said.

TAGB's listing exercise involves a proposed rights issue of 860 million new shares and a public issue of 350 million new shares at 50 sen per share.

TAE is proposing to sell its property units to TAGB in an all-share deal and raise about RM613 million.

It will inject its property assets held under TA Properties Sdn Bhd; Sanjung Padu Sdn Bhd; Wales House Trust, which owns the Radisson Plaza Hotel in Sydney; and Taman Duta Residences, in exchange for shares worth RM1.75 billion in TAGB.

TAE is also proposing a capital distribution to its shareholders that will cut its share capital, share premium reserve and retained earnings. As a result, its par value would be reduced to 50 sen from RM1 currently.

Upon completion of the proposed capital distribution and listing, TAE will hold at least 24.3 per cent equity interest in TAGB.

TAE will also use part of the proceeds to apply for an investment banking licence, and the rest for its future working capital.

By Business Times (by Sharen Kaur)

Shenyang Islamic development project plan on track

The proposed RM11 billion commercial and residential development in Shenyang, China, that will utilise Syariah-compliant financing from Malaysian banks is on track despite the current global economic downturn.

Islamic Banking and Finance Institute Malaysia (IBFIM) managing director and chief executive officer Datuk Dr Adnan Alias said the report on the feasibility study of the project is nearly completed.

"We will present the report to the Shenyang Governor next month when we meet in Singapore," he told Business Times when asked about the progress of the project.

IBFIM is the syariah adviser to the proposed development.
Themed "Modern Islamic Lifestyle", the proposed development is expected to commence by the end of this year and be completed within five years.

The project would take place in the Shenyang Finance and Trade Development Zone. It will be developed on a 17.96ha site in one of the most centralised Muslim community living areas in China.

A special purpose vehicle, known as Shenyang-Malaysia Development Sdn Bhd (ShenMas), was formed in November last year to undertake the conceptual planning, land acquisition, funding issues and feasibility studies.

A consortium of Malaysian builders, including Bina Puri Group, will be involved in the development of the project.

Shenyang is the capital city of Liaoning Province. The province is located south of northeast China, which has about 100,000 Muslims.

China, one of the world's fastest growing economies, plans to woo Islamic banking and finance institutions to the country by establishing an Islamic finance hub.

By Business Times (by Hamisah Hamid)

Surprise rise in existing home sales in December

A home sits for sale on 25 July, 2007 in Batavia, Illinois a suburb outside of Chicago. The pace of sales of previously owned homes rose for the first time since September and inventory declined — AFP

WASHINGTON: An unexpected improvement in US home sales provided a rare dose of good economic news on Monday, but companies continued to wield the axe on jobs as the year-long recession inflicted more pain.

The pace of sales of previously owned homes rose for the first time since September and inventory declined, a bit of positive news amid a US housing market crash that has chilled growth, sent unemployment soaring and sharply eroded household wealth.

Sales of previously owned US homes increased 6.5% to a 4.74-million-unit annual rate in December, the National Association of Realtors said. Analysts polled by Reuters had expected sales to set a 4.40 million unit pace.

Analysts said the uptick was encouraging and might be a signal the worst housing bust in decades was finally nearing a bottom following government steps to slow foreclosures and cut interest rates on home loans.

“Though unlikely to mark the bottom of the housing downturn, the report at least suggests the market is not spiraling downwards in response to mounting job losses and tightening credit standards,” said Sal Guatieri, an economist at BMO Capital Markets in Toronto.

“An upward trend in home sales that gobbles up supply and stabilises prices would be an important signpost of economic recovery, but that is likely still some ways off.”

US government bond prices and the dollar fell as the housing data eroded their safe-haven appeal, encouraging investors to seek riskier assets.

Stability in the US housing market, the root cause of the worst financial crisis since the Great Depression, is seen key to any recovery in the domestic economy which has been stuck in recession since December 2007.

December existing-home sales were largely driven by distressed sales, which dragged the median national home price down 15.3% from a year earlier to US$175,400.

The chief economist of the National Association of Realtors, Lawrence Yun, said it was the largest price drop since NAR started keeping records in 1968 and probably the largest since the Great Depression.

“There is pent-up demand, which could be unleashed with the right stimulus. The Obama administration and Congress need to move fast … to stabilise home prices and set the foundation for a sustainable economic recovery,” Yun said.

US President Barack Obama is drumming up support for an US$825bil spending package, which he hopes will kick-start the economy and create or preserve three million to four million jobs.

Analysts were also heartened by the 11.7% drop in the inventory of existing homes for sale to 3.68 million units from 4.16 million in November.

That translated into 9.3 months of supply at December’s sales pace. The supply stood at 11.2 months’ worth in November.

“It suggests we are working through some of the inventory, which is the first thing to happen before we see any kind of housing recovery,” said Frank Lesh, futures analyst at FuturePath Trading in Chicago.

“Until we work through the supply that’s out there, it’s going to be hard to see anything turn. The low rates the Fed has engineered is starting to create some demand, which is what we wanted to see.”

Separately, the Conference Board said its index of leading economic indicators rose 0.3%, beating analysts’ forecast for a 0.3% decline.

Economists attributed the rise to the improvement in credit markets, thanks to the action by the Federal Reserve.

The Fed has cut interest rates almost to zero and pumped hundreds of billions of dollars into financial markets to keep them operating.

The Fed is expected to hold its target range for the key overnight federal funds rate steady at zero to 0.25% at the end of its two-day meeting today.

Tony Crescenzi, chief bond market strategist at Miller, Tabak & Co, reckons that given the recent uptick in government bond yields and mortgage rates, the Fed could place emphasis on its plans to buy mortgage securities and possibly Treasuries.

By Reuters