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Friday, June 4, 2010

Paramount to expand landbank

Property developer Paramount Corp Bhd said part of the proceeds from its 20 per cent stake sale in Jerneh Insurance Bhd will be used to buy land in the Klang Valley.

"Landbank is an important part of our strategic plan. We just bought 20ha in Cyberjaya, Selangor because of the location. We buy where there is success," managing director and chief executive officer Ong Keng Siew said.

Ong said it is selling its stake in Jerneh to focus on property development and education, which will continue to contribute 70:30 to its bottom line.

"It is very glamorous to diversify but to play the diversification game is not very attractive in the eyes of investors. We have a few options for the proceeds from the stake sale and it may include giving special dividends to shareholders," Ong said.
Paramount, with three ongoing projects, has RM207 million cash in hand and 390ha.

The company is planning to launch some RM2 billion worth of properties this year and next, Ong said after the company's shareholders meeting in Subang Jaya, Selangor yesterday.

Paramount plans to launch a 200ha mixed development project, dubbed "Banyan Hills" in Sg Petani, Kedah by the fourth quarter of this year.

Next year, it plans to start building the new KDU College campus and a mixed development on 8.7ha in Glenmarie, Shah Alam.

"We are relocating our branch campus in Section 13, Petaling Jaya to Glenmarie. We will redevelop the 2.1ha site into a high-end residential and commercial project in the near future," Ong said.

As for the land in Cyberjaya, Paramount plans to build mid-to high-end residential properties worth RM530 million, in two phases, starting next year.

Ong also said the company will hive off its loss-making English language centre in China.

It is talking to a buyer and expects to conclude the deal by the end of this year. Ong did not say how much it is selling the centre for.

"There is a lot to do in Malaysia in education. While the sector is tough as there are many players, we position ourselves as a quality education provider.

"We plan to build more campuses and international schools and are looking at the Iskandar Development Region in Johor. We want to increase our existing 8,000 student population," he said.

By Business Times

MRCB to buy more land in Klang Valley

KUALA LUMPUR: Malaysian Resources Corp Bhd’s (MRCB) chief executive officer Mohamed Razeek Hussain said the group will use part of the cash raised from recent share sale exercise to buy small pieces of prime land around Klang Valley, while keeping an eye for opportunities to participate in upcoming government projects.

These includes a massive Government development plan in Sungai Buloh on a joint- venture with the main shareholder the Employees Provident Fund (EPF).

From left: MRCB executive director Datuk Ahmad Zaki Zahid, Mohamed Razeek Hussain and MRCB chief financial officer, Chong Chin Ann after the AGM

“We will be looking to participate (in the Sungai Buloh project), but there’s still no award from EPF to MRCB,” Razeek told reporters after the group’s AGM yesterday.

MRCB’s chairman Tan Sri Azlan Zainol, who is also EPF’s chief, however, did not attend the post-AGM press conference.

The pension fund had been buying shares in MRCB from the open market after its takeover offer at RM1.50 a piece was rejected by minority shareholders in late March.

Latest filing with Bursa Malaysia showed EPF as the single largest shareholder in MRCB with a 40.9% stake.

Shares in MRCB had risen to as high as RM1.69 on April 2 on high hopes it would benefit from the Government’s intention to unlock the values of its landbank around Klang Valley. The stock was up 2 sen to close at RM1.50 yesterday.

At the press conference yesterday, Razeek said the group’s might look beyond local shores in building up its business.

“We are always on the lookout for new opportunities, locally or abroad, but we will only go into our areas of core competency,” he said.

The group is building an apartment block in Melbourne with gross development value of A$57mil.

Razeek said MRCB was currently bidding for projects estimated to total RM600mil at home to replenish its engineering and construction order book of RM3bil.

“We have to go with some degree of optimism,” he said, adding that the amount tendered excludes in-house projects at KL Sentral.

This excludes upcoming projects such as the Light Rail Transit (LRT) expansion, where MRCB is one of the contractors already pre-qualified for the project.

On his outlook for the current year ending Dec 31, 2010 (FY10), Razeek said the group expected revenue to top RM1bil for the first time this year, with “reasonable growth” in profits from last year.

In FY09, MRCB return to the black with a net profit of RM34.6mil on sales of RM922mil.

By The Star

MRCB upbeat on winning contracts worth RM250m

MALAYSIAN Resources Corp Bhd (MRCB) hopes to win some RM250 million worth of contracts this year from RM600 million worth of projects it tendered for in Malaysia.

Its chief executive officer Mohamed Razeek Hussain said the bids, for its construction division, are for jobs in the Iskandar region in Johor, Sabah, Kuantan and in Gombak, Kuala Lumpur.

Razeek, who was speaking to reporters following the company's annual general meeting in Kuala Lumpur yesterday, expects a decision on the award within the next three months.

"We have been shortlisted and we stand a good chance (to win) for a hospital project in Sabah," he said, declining to reveal the amount.

On participation in the 1,214ha land project in Sungai Buloh which is being developed by MRCB's controlling shareholder the Employees Provident Fund (EPF) and the government, Razeek said that no tender have been called yet.

Similarly, he said that no tender had been called for the RM7 billion extension of the light rail transit line in the Klang Valley. MRCB Engineering has been prequalified as main contractors for facilities work and subcontractor for fabrication and delivery of segmental box girder.

In the current financial year ending December 31 2010, MRCB expects to cross the RM1 billion revenue mark and make a significant improvement in its profitability this year, as all business segments grow.

In 2009, it made RM921.61 million in revenue and a net profit of RM37.48 million.

Its current construction order book stands at RM3 billion while its prized KL Sentral development project is expected to last until 2016.

"Most of our projects are ending in 2011 and 2012," he said.

One such project where it will enjoy recurring income is the 8.1km RM1 billion Eastern Dispersal Link (EDL) that will link the Sultan Iskandar Customs, Immigration and Quarantine (CIQ) to the PLUS highway. The link will be ready in September 2011 and toll collection will start in 2012.

The Duta-Ulu Kelang Expressway (DUKE) will start to contribute positively in the next three to four years.

By Business Times

MRCB: Prime land deals in pipeline

MALAYSIAN Resources Corp Bhd (MRCB) plans to buy its first piece of land in the Kuala Lumpur City Centre and it could pay as much as RM170 million for the asset.

If the deal happens, MRCB would start its maiden project in the city centre.

Chief executive officer Mohamed Razeek Hussain said it has identified a piece of land measuring 0.45ha to 0.9ha, located a stone's throw away from the Petronas twin towers.

"We have identified the land near KLCC ... we can get a good price below what's in the market," he said. The going market rate for land in the area is around RM2,000 to RM2,500 per sq ft.
"It is work in progress, we are talking to the landowners and we hope to conclude it as soon as possible," Mohamed said.

While he did not say where the land is, sources say it is located on Jalan Kia Peng and is slated for development of high-end residences.

MRCB also plans to buy an 8ha plot in the Klang Valley, outside the KLCC.

By Business Times

Sunway REIT to be Bursa’s largest

PETALING JAYA: Sunway Real Estate Investment Trust (REIT), which is slated for listing on July 8 on the main board of Bursa Malaysia, is set to become the largest REIT on the local stock exchange with a fund size of 2.78 billion units.

However, according to a report by OSK Research, Sunway REIT’s initial public offering (IPO) would be at a premium to other Malaysia REITs.

“Based on the Sunway REIT’s net asset value per unit (NAV/unit) of 97 sen upon listing, its price over NAV (P/NAV) was estimated to be at about 1x (based on the assumed IPO price of RM1/unit for the institutional offering).

“This is about what the other REITs are currently trading at on average,” said the report.

The REITs’ dividend yield was only expected at about 6.7% (based on forecast dividend per unit (DPU) of 6.7 sen), which was below the average 8.5% for other REITs, it added.

It said this could imply that Sunway City (SunCity) would be selling the properties to the REIT at a high valuation benchmark.

“Having said that, the low yield offered by Sunway REIT and the premium to be paid for those properties could be justifiable given that the trust will be the largest in Malaysia, with the largest free float of about RM1.6bil vis-à-vis any given REITs, and the unique prospects of those properties, which offer a relatively more defensive investment and yet potentially attractive long-term growth,” the report noted.

It added that Sunway REIT might potentially attract certain classes of investors with a defensive investment strategy, such as pension and insurance funds. “This has been proven by the fact that Sunway REIT very recently secured four large cornerstone investors (at 98 sen/unit) which collectively hold about 14% stake in the trust,” it said.

The investors are a Singapore sovereign wealth fund, the Employees Provident Fund, Permodalan Nasional Bhd and Great Eastern.

The report said a trading buy opportunity in SunCity with an adjusted price target of RM4.52 would be the biggest beneficiary of the deal if the properties were to be disposed off at such valuations.

“Based on conservative estimates, this will add a further 69.8 sen/share (or a maximum 99 sen, depending on the response to the book-building process for the institutional offering) to SunCity’s net asset, bringing it to about RM5.32/share,” it said.

It further added that pegging this against 0.85x to 0.90x (P/NTA), which is the average that its peers were currently trading at, the reseach house estimated that SunCity might likely trade in the range of RM4.52 to RM4.79 as the listing of Sunway REIT got closer to realisation.

HwangDBS Vickers Research said in a report that Sunway REIT’s yield looked “rich” at 6.9% versus the sector’s 8.5%, while rising interest rate environment could force yields higher.

However, the report said, the REIT should help SunCity unlock its investment properties’ value and lead to more efficient allocation of resources to boost return on average asset.

The report maintained a “buy” call on SunCity and target price of RM4.70, assuming no discount for property investment and 30% discount for property development.

By The Star

Axis-REIT to inject more assets

KUALA LUMPUR: Axis Real Estate Investment Trust (Axis-REIT) will acquire a parcel of leasehold land, and industrial buildings, in Kuala Langat, Selangor, from Corporate Landmarks Sdn Bhd for RM85mil.

It will also purchase leasehold land with buildings in Petaling Jaya from Dazzling Township Sdn Bhd for RM49mil.

Axis-REIT also plans to undertake a proposed placement of up to 68.820 million new units, representing about 22.4% of the existing units in circulation, at a price to be determined later.

It also proposes to increase its approved fund size to a maximum of 375.901 million units from 307.081 million, currently.

By Bernama