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Thursday, December 9, 2010

MK Land stays open to mergers If there is a strategic opportunity, group will not hesitate to consider

SUBANG JAYA: MK Land Holdings Bhd is not ruling out the possibilities of merging with other property players, according to chief operating officer Lau Shu Chuan.

MK Land’s previous project – the Metropolitan Square condominium in Damansara Perdana township.

If it (potential merger) is better for the company, why not? We're always open, he said after its AGM yesterday.

Lau said the group did not mind if someone with deep pockets was interested in such a proposition.

However, he said the group had yet to receive any proposals.

Lau added that they would look at the potential value if such an opportunity arose.

Commenting on the mergers and acquisitions in the property industry, Lau said companies were leveraging on one another and merged if there was a synergy.

We believe there is still room for niche market players, he said, adding that the product and location of the property matters if its landbank was strategic.

Meanwhile, Lau said the group hopes to achieve better results in the current financial year ending June 30, 2011 (FY11) boosted by ongoing projects and new launches.

He said the group had achieved improved financial results year-on-year since FY08.

For the first quarter ended Sept 30, MK Land posted a net profit of more than doubled to RM3.4mil from RM1.2mil a year ago.

However, revenue for the period was lower at RM61.7mil against RM80.8mil previously.

MK Land posted a net profit of RM11.2mil on revenue of RM323.5mil in FY10.

Our financial performance have been on an uptrend. Arising from this, we expect to maintain this kind of growth going forward, Lau said.

He said its main contributions would come from its projects in the Klang Valley as its other projects was somewhat weaker.

We're talking about RM100,000 to RM200,000 per unit for houses outside Klang Valley and a unit in the Klang Valley is between RM1mil and RM2mil, Lau explained.

The group has also sold some of its assets and the cash generated was used to pare down its borrowings.

Lau said it sold 23 acres of its land in Damansara Perdana and five acres of land in Cyberjaya.

The group had managed to pare down its debt to RM398mil as at June 30 from RM550mil in FY08 and intends to trim it further.

Lau said the group had managed to lock-in over RM300mil from the sale of its land and joint venture projects.

He said the money from selling its land had come in but expects cash inflow from its joint ventures to flow in over a period of time.

Our gearing of 0.36 times is not a frightening figure but we realised that we are paying a lot of finance charges.

The group still has capacity to borrow more. We're not over-geared. We may gear up ourselves in future if needed, Lau said.

MK Land has a total landbank of about 5,000 acres worth some RM800mil on its book.

In terms of market price, it could be higher, Lau said, adding that some 4,000 acres of its land were in the northern part of peninsula.

By The Star

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