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Wednesday, November 24, 2010

M'sian city apartment price 2nd lowest in region

KUALA LUMPUR: The average price of city apartments in Malaysia is the second lowest compared with other countries in the region.

In a statement here yesterday, Global Property Guide (GPG) said according to its research, only Indonesia offered city apartments that were priced lower than those in Malaysia.

In comparison, the average price of city apartments in Singapore is almost eight times more than in Malaysia, beating even Australian prices, which are almost five times higher than Malaysian city apartments.

Other countries surveyed included the Philippines, Cambodia and Thailand, where high-rise residential properties in the city cost more than Malaysia, it said.

The statement said GPG has developed the world's only global rental yields database to support a fundamental investor perspective and developed the world's first global transactions costs database, said GPG founder/publisher Matthew Montagu-Pollock.

International property buying is here big time. Yet people often don't get the information they need, he said.

Montagu-Pollock will be here to address an international property seminar entitled Property Market Outlook' organised by Iskandar Associates from Nov 29-31.

He will be sharing his views with participants on the property market outlook for Asia in 2011.

By Bernama

EPF looks at expanding property investment

KUALA LUMPUR: The Employees Provident Fund (EPF) will evaluate whether to raise its investment in properties, said deputy chief executive officer (investment) Shahril Ridza Ridzuan.

Shahril Ridza Ridzuan

We will look at it from time to time whether the number that we have invested is the right asset allocation at that point of time, he said on the sidelines of Bursa Malaysia's Business Sustainability Programme yesterday.

Currently, the pension fund has less then 2% of its total accumulated funds invested in properties. However, it has a strategic asset allocation target of 5% for properties.

It (the percentage) will grow over time. As for the timeframe, it depends on the opportunities that arise, Shahril said, adding that it was hard to put a timeframe to the target.

In August, the EPF announced that it would invest 1bil (RM4.88bil) in properties in the United Kingdom.

Meanwhile, Shahril said EPF would wait for the outcome of PLUS Expressway Bhd's shareholders meeting in December before deciding on its next course of action in relation to the proposed acquisition of PLUS' assets and liabilities.

He said it also needed to obtain approval from bondholders and the Government. We have to discuss with the Government on the concession agreement, because any changes will require its approval on the concession as well, he said on EPF's next course of action once it obtained the shareholders' approval.

PLUS has accepted the revised joint offer from EPF and UEM Group Bhd to take over the company's assets and liabilities for RM23bil.

The proposed acquisition involves a cash payout of RM11bil to minority shareholders and RM12bil of the amount owing to Khazanah Nasional Bhd, UEM and EPF.

By The Star

Mah Sing to unveil new home project valued at RM800mil

GEORGE TOWN: Mah Sing Group Bhd will unveil its RM800mil residential project on a 61-acre site in Batu Ferringhi in the first quarter of 2011.

Tan Sri Leong Hoy Kum ... ‘Penang is an important market for us and we want to create the same kind of excitement there that we have achieved in the Klang Valley.’

Group managing director and chief executive Tan Sri Leong Hoy Kum said the project to be known as Ferringhi Residence@Penang was designed to be a gated and guarded project, comprising landed properties such as semi-detached, bungalow homes and condominiums.

The semi-detached units, with built-up of 3,000 sq ft, is priced from RM1.4mil onwards, while the bungalow homes, with built-up of 4,200 sq ft, is priced from RM2.2mil.

There will also be condominiums with built-up areas of between 850 sq ft and 1,800 sq ft, priced tentatively from RM480 psf.

Most phases would enjoy commanding views of the sea, he said.

Leong added that the semi-detached homes and bungalows would have their own separate clubhouse facilities.

The condominium will have a facilities deck that will house amenities such as a swimming pool, gym and various other facilities, he added.

Leong said Batu Ferringhi, a renowned tourist belt on the island, was sought after by homeowners and investors as it was located away from the city's hustle and bustle.

Our superlink homes in Penang such as Residence@Southbay are about 90% sold and are expected to be handed over to purchasers by the first quarter of 2011. Penang is an important market for us and we want to create the same kind of excitement there that we have achieved in the Klang Valley, he said.

Mah Sing's wholly-owned subsidiary Uptrend Housing Development Sdn Bhd yesterday acquired the 61-acre freehold site in Batu Ferringhi for RM157.3mil cash or about RM59.17 psf.

The land has been converted for residential development and the group has received approval from the local authorities for the development plans of the landed properties of Ferringhi Residence@Penang, he said.

By The Star

Mah Sing unit buys 24ha land in Batu Ferringhi

UPTREND Housing Development Sdn Bhd, a wholly-owned unit of Mah Sing Group Bhd, has acquired 24.41 hectares of freehold land in Batu Ferringhi, Penang, for RM157.3 million cash.

In a statement yesterday, Mah Sing said the land will be developed into a resort-style project, named Ferringhi Residence@Penang, with an estimated gross development value of RM800 million.

The company has paid RM17.3 million, representing 11 per cent, of the total consideration upon signing of the sales and purchase agreement (SPA).

"The balance will be paid within five months from the SPA date subject to conditions precedent, with an automatic extension of a month subject to 4 per cent interest per annum," it said.
Mah Sing's group managing director-cum-group chief executive Tan Sri Leong Hoy Kum said the group is confident of the resort-style development plan as it already has four projects in Penang, including Icon Residence and Southbay Penang mixed development.

The company said the land has already been converted for residential development and development plan procured for landed development.

"The main access road is ready and external infrastructure substantially completed," it said.

By Bernama

Tough revamp calls for Sime

Sime Darby Bhd, which is expected to snap its money losing streak in its first quarter results, must stick to its plantation and property businessess but it will have to review the remaining four activities and other smaller units.

The group, which has posted losses for two straight quarters due to provisions, also runs hospitals, distributes cars and heavy equipment like excavators and fabricates oil rigs, among others, under its energy and utilities division.

Sime Darby's acting president and group chief executive officer Datuk Mohd Bakke Salleh said last week that there is a plan to sell some of its assets to better manage the group.

He did not say which divisions can be sold but added that the plan will be presented to the board next year. Sime Darby is also set to announce its first quarter results tomorrow.

Analysts said having many businesses may not necessarily be a good thing due to small margins, little impact to the bottom line and intense competition.
An analyst with RHB Institute said the automotive business as an example is without a doubt a good revenue generator but margins are thin and competition stiff.

"The automotive business is too widespread and business strategies change all the time to suit the market's supply and demand situation.

"To me, what matters most is the long-term bottom line and Sime should just focus on its two core business which are plantations and property," the analyst added.

CIMB Investment Bank Bhd's senior regional analyst Ivy Ng said Sime Darby could sell its non-core business like hypermarket operator Tesco, tyre business or hotel business (Sime has a stake in PNB Darby Park hotel).

A CLSA analyst who declined to be named said Sime Darby could even sell its oil and gas division to potential buyers like Malaysia Marine and Heavy Engineering Bhd.

"However, it might not happen because it just bought Ramunia's fabrication yard, indicating it wants to stay in the business. What is important now is that Sime Darby must seriously look at future tenders and question whether it can really carry out the job or not. Otherwise, it will run into another cost overrun."

Another analyst said the healthcare business is also a good business because it is recession-proof with lucrative future potential.

Meanwhile, Sime Darby is due to report positive numbers for its first quarter due to current high crude palm oil (CPO) prices.

OSK Investment Bank analyst Alvin Tai said the results will be good as CPO prices and fresh fruit bunch production are typically good in the months of August, September and October each year.

An analyst at AmResearch said earnings will be better due to good CPO prices as well as the absence of any major provisions.

CIMB's Ng said earnings should be positive and she expects profit to account for around 20-22 per cent of consensus earnings of RM3.1 billion in fiscal 2011.

Sime Darby made a net profit of RM684.6 million on the back of a RM7.7 billion revenue in its first quarter ended September 30 2009.

By Business Times

Plan to group YTL property firms under YTL Land

YTL Land & Development Bhd plans to buy property firms that own prime land in Malaysia and Singapore for RM476 million from its parent and related companies.

It will issue some RM253 million of 10-year irredeemable convertible unsecured loan stock to parent YTL Corp Bhd as payment for the purchases and to settle the firms' outstanding inter-company balances.

The rest will be settled in cash, YTL Land said in a filing to Bursa Malaysia yesterday.

The plan to house the group's property development assets under YTL Land allows the company to acquire key assets and ongoing property development in strategic locations in Malaysia and Singapore, it added.
YTL Land will have access to a proposed development in Brickfields as well as land in Jalan Bukit Bintang and Jalan Stonor in Kuala Lumpur, and in Genting Highlands, Pahang.

It will also have access to development land in Singapore's Sentosa Cove and Orchard Boulevard.

YTL Land hopes to complete the purchases by the first half of next year.

Upon completion, the company's capital structure and asset base will be enlarged and it will rank as one of the country's leading property development companies with a regional presence.

"This will also enhance its earnings potential and competitiveness in property development, allowing it better access to the financial markets," it said.

The plan needs the approval of YTL Land's and YTL Corp's shareholders, among others.

Given that these are related party deals, the company has appointed PM Securities as the independent adviser to non-interested directors and shareholders.

Maybank Investment Bank is the principal adviser for the deals.

By Business Times

Bina Puri to build office lots in Jalan Pasar

Bina Puri Holdings Bhd today signed an agreement with the Selangor and Federal Territory Chha Yong Fay Choon Kuan to invest in the construction of two shop office blocks in Jalan Pasar, here.

The development of 24 units of 4-storey shop offices and one unit of 3-storey office on a two-acre (0.8 hectare) site would cost RM16 million.

"We are very pleased to have the opportunity to work with the association, which is a reputable association representing the Chinese Hakka clan in the Klang Valley.

"We are very optimistic that the development will be well received as it is strategically located at Jalan Pasar, which is a well known commercial hub amongst the Chinese community," Bina Puri Group Managing Director Tan Sri Tee Hock Seng said at the signing ceremony.

The agreement was signed between Bina Puri's subsidiary, Bina Puri Properties Sdn Bhd, and the association which owns the land.
Development is expected to commence in the first quarter of next year and completed within 15 months.

"Upon completion, this investment will contribute positively to our earnings stream.

"Moving forward, we are committed to further maximise our shareholders value and continue to explore new business opportunities which provide us with recurring income," Tee said.

According to the company, the investment will guarantee a return of RM40.6 million in 14 years derived from rental income of the development.

By Bernama

YTL Corp plans revamp of property division

PETALING JAYA: Conglomerate YTL Corp Bhd plans to house all its property development assets and projects under its property development arm YTL Land & Development Bhd (YTL Land), as it undertakes several disposal deals and settlement of outstanding intercompany balances valued at RM476.05mil.

YTL Corp told Bursa Malaysia yesterday that it, along three other wholly owned subsidiaries, entered into some 10 agreements and settlement of outstanding intercompany balances with YTL Land, a 60.72%-owned unit of YTL Corp.

The agreements would see YTL Corp disposing of its property assets and projects in Malaysia and Singapore to YTL Land.

The disposal consideration and settlement of the outstanding intercompany balances of RM476.05mil is to be satisfied by the issuance by YTL Land of RM253.03mil nominal value of 10-year 3% stepping up to 6% irredeemable convertible unsecured loan stocks (Iculs) at 100% of nominal value of RM0.50 per Iculs and the remaining RM223.02 in cash, it said in a filing yesterday.

YTL Land would also undertake a renounceable rights issue of Iculs to raise funds to partly satisfy the cash portion. YTL Corp would subscribe in full for its entitlement under the proposed rights issue of Iculs.

The conversion price of the Iculs has not been fixed. The Iculs and the new YTL Land shares to be issued arising from the conversion of the Iculs would be listed and quoted on the Main Market of Bursa Securities.

Under the share sale agreements, YTL Corp would dispose of its 100% stakes in Arah Asas Sdn Bhd, Satria Sewira Sdn Bhd, Pinnacle Trend Sdn Bhd, Trend Acres Sdn Bhd and its entire 70% stake in Emerald Hectares Sdn Bhd to YTL Land.

Meanwhile, YTL Corp's wholly-owned units YTL Singapore Pte Ltd, Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd also entered into share sale agreements with YTL Land.

YTL Land had also entered into a land deal with YTL Land Sdn Bhd.

This is in line with the YTL Corp's ongoing strategy for its principal business arms to own and operate the relevant assets within their business spheres in order to leverage on operational and developmental efficiencies and synergies, it said.

The disposals are aimed at unlocking the value of YTL Corp's investments in its property units and projects.

YTL Corp would continue to participate in and benefit from the development, potential earnings and capital appreciation of the land owned by the disposed firms through its existing shareholding in YTL Land and its interest in the Iculs and/or the YTL Land shares arising from the conversion of the Iculs.

YTL Corp said the net cash proceeds from the proposed disposal and the settlement of outstanding intercompany balance would be utilised for general working capital purposes.

Until such time as the net cash proceeds are utilised, they will be held in interest-bearing bank deposits, money market instruments, deposits and/or other realisable short-term investments pending further evaluation of the strategic options and opportunities of YTL Corp and its subsidiaries, it said.

By The Star

InterContinental to make debut in Malaysia next year

SINGAPORE: The InterContinental hotel brand will make its entry into Malaysia on Feb 1, 2011, when it replaces the current Nikko Hotel Kuala Lumpur.

In a statement yesterday, InterContinental Hotels Group (IHG) said the 473-room Nikko Hotel in Jalan Ampang would take the name InterContinental Kuala Lumpur.

IHG Asia Australasia managing director Jan Smits said IHG was excited to bring the InterContinental brand to Kuala Lumpur.

He said the hotel market in Malaysia had the potential for long-term growth, especially in view of the country's target of 36 million tourist arrivals by 2020.

Smits said Kuala Lumpur was a key regional destination and Malaysia was one of the few South-East Asian countries that saw an increase in visitor arrivals in 2009, a trend that had continued to-date this year.

Thomas Lee, director of the hotel's owning company MTJ Development Sdn Bhd, said with the InterContinental brand, the hotel would be able to capture an even greater share of the growing number of visitors to Kuala Lumpur, one of the most visited cities in the world.

The statement said the hotel was slated to embark on a 30-month refurbishment, which would take place in three phases.

Currently, there are 170 InterContinental hotels operating globally in more than 60 countries, including 50 in Asia Pacific.

In Malaysia, IHG also operates Crowne Plaza Mutiara Kuala Lumpur, Holiday Inn Kuala Lumpur Glenmarie, Holiday Inn Resort Penang and Holiday Inn Malacca.

With the recent signing of the Holiday Inn Express in Kota Kinabalu, IHG will have all its key brands operating in Malaysia when the Holiday Inn Express debuts in the market.

By Bernama

IJM Land-MRCB deal to create RM7b merger

IJM Land Bhd and Malaysian Resources Corp Bhd (MRCB) will merge to create a RM7 billion property company that will be the country's second largest after the recently-proposed UEM Land Bhd-Sunrise Bhd union.

IJM Land and MRCB sealed an initial deal on the proposed merger yesterday.

It is still unclear who will take the lead in the merger, but based on the two companies' shareholders fund size, IJM Land looks set to be in the driver's seat.

IJM Land shareholders' funds stood at RM1.65 billion as at March 31 2010, while MRCB's was about RM697.1 million as at December 31 2009.

IJM Land chairman Datuk Krishnan Tan said both parties had initiated the merger talks.
"We have common shareholders, but it stops there," Tan said at a press conference after sealing the initial agreement in Kuala Lumpur yesterday.

According to latest filings at Bursa Malaysia, Employees Provident Fund (EPF) owns an indirect stake of 62.47 per cent in IJM Land and about 42 per cent in MRCB.

The two parties are yet to come up with a definitive agreement, but have agreed that the merger will be done through a new company, in which IJM and MRCB will exchange shares, or a combination of shares and cash.

The price for the share swap has been fixed to curb speculation on the stocks.

Shares in IJM Land and MRCB will be exchanged based on RM3.65 per share for IJM Land and RM2.30 per share for MRCB.

This represents a 19 per cent premium and 7 per cent premium respectively to IJM Land's and MRCB's last traded share price on Monday.

A definitive agreement is expected to be sealed by December 14 this year, company executives said.

The merged entity will have total assets of RM3 billion and 3,600ha of landbank.

"With the significant increase in size, the merged group will be able to further strengthen its market leadership in the commercial and residential segments of the property market and compete more effectively in both local and international markets," MRCB chief executive officer Mohamed Razeek Hussain said.

The merged entity is expected to be listed on the local stock exchange by the middle of 2011.

Considering that the entity is slotted to be purely in property development, there is a possibility that MRCB would divest its interests in its other non-core businesses.

"Post-merger, there will be a rationalisation exercise... so we could divest or we could keep it (non-core businesses)," Razeek said.

MRCB's engineering and construction division, for example, owns the concessions for Duta-Ulu Kelang Expressway (Duke) and Eastern Dispersal Link Expressway (EDL) in Johor Baru.

It is also involved in several construction projects such as the construction of the traffic dispersal linkage at Jalan Tun Sambanthan for the development of Kuala Lumpur Sentral.

By Business Times

IJM Land to merge with MRCB in share-swap deal

From left: MRCB CFO Chong Chin Ann, CEO Mohamed Razeek Hussain, IJM Land MD Datuk Soam Heng Choon and chairman Datuk Krishnan Tan at the MoU signing on Tuesday.

KUALA LUMPUR: IJM Land Bhd and Malaysian Resources Corp Bhd (MRCB) plan to merge via a share swap in a newly incorporated company that is slated to emerge as the nation's second-largest property developer.

Yesterday the two companies signed a memorandum of understanding (MoU) and planned to come up with a definite agreement within three weeks.

The merger will involve a share-swap whereby the shares of IJM Land and MRCB will be exchanged for shares in the new company.

The exchange price per IJM Land share is RM3.65 and RM2.30 per MRCB share. This will translate into a premium of 27.5% and 10.2% for IJM Land and MRCB respectively to the five-day volume weighted average market price.

Post merger, IJM Land and MRCB plan not to maintain their listing status and the new company will take over their listing status by June 2011. IJM Land's market capitalisation is currently at RM3.4bil while MRCB's is about RM3bil.

MRCB CEO Mohamed Razeek Hussain said the MoU was only the first step of the merger where they would reveal further details of the agreement, such as shareholding structure and share swap ratio for the merger, in three weeks' time.

But because of rife speculation of the merger in the media, we think it will be fair to announce that both companies are in discussion and have signed an MoU pursuant to the merger. We are not ready to give the plethora of arrangement just as yet, he said after the MoU signing yesterday.

Meanwhile, IJM Land chairman Datuk Krishnan Tan said the two companies complement each other via the merger.

It's a merger between businesses, people and branding to take both companies to the next level. It's a good marriage, he said.

MRCB specialises in high-rise development office and condominiums while IJM Land projects are slanted towards mass township of mixed developments.

According to a presentation revealing some preliminary details of the merger, the new company is anticipated to be a mega-size property developer with implied market valuation of RM7bil, combined annual revenue of RM2bil and net asset of RM3bil, landbank in excess of 9,000 acres and increase in geographical presence.

AmResearch said the merger between MRCB and IJM Land made sense.

IJM Land could leverage on MRCB's advantage in Sungai Buloh land. MRCB has been assisting the EPF in drawing up the masterplan for the redevelopment of the RRI (Rubber Research Institute) land (in Sungai Buloh).

The research house added that IJM Land would bring expertise and a strong track record to the partnership as MRCB lacked experience in township development.

Separately, OSK Research said the merger would boost synergy and economies of scale. We believe the combined entity will stand a strong chance of being appointed the master developer of the prized piece of federal land at RRI.

However, Krishnan said the purpose of the merger was beyond any specific project and was more towards complementing each other and to be more competitive.

MRCB's largest shareholder is the EPF while IJM Land is a unit of IJM Corp Bhd, a construction and plantation group.

On Nov 4, UEM Land Holdings Bhd made a RM1.4bil takeover offer for Sunrise Bhd that would make it the largest developer of the country.

IJM Land, in its filing to Bursa Malaysia, said its net profit fell by 19.4% to RM30mil for its second quarter ended Sept 30 from a year ago. Revenue for the quarter under review also fell by 30% to RM212.9mil.

The decrease in both revenue and net profit for the quarter was due to strong take-up rate achieved in the preceding quarter for Lot 28 in Penang and sale of units (Platino and Summer Place in Penang) previously reserved for bumiputra being offered to the public.

However, cumulatively, for first six months of the current financial year, IJM Land saw its net profit surged by 30.8% year-on-year on the back of RM577.9mil of revenue.

By The Star

Tan to quit as CEO, MD of IJM Corp Dec 31

IJM Corp Bhd's Datuk Krishnan Tan will step down as chief executive officer (CEO) and managing director (MD) of the group, effective December 31 2010.

Datuk Teh Kean Ming will instead be promoted as the new CEO and MD, IJM Corp said in a filing to Bursa Malaysia yesterday.

Tan, however, will stay on as executive deputy chairman from January 1 next year.

IJM Corp also announced that Tan Gim Foo will be the new deputy CEO and deputy MD of the group effective January 1 next year.

By Business Times

SunCity, Sunway to combine? Analysts see a current trend of M&As

PETALING JAYA: Market observers are speculating that a marriage of sorts is on the cards for Sunway City Bhd (SunCity) and Sunway Holdings Bhd, after both companies had their shares suspended from trading for two days from yesterday, pending a material announcement on a corporate exercise.

According to several analysts polled by StarBiz, the potential marriage between the sister companies would most likely be consummated via a share-swap, non-cash arrangement. The pricing for the potential deal, nevertheless, remained a question.

SunCity's last traded price was RM4.49 per share, while that of Sunway was RM2.25.

A merger between SunCity and Sunway was seen likely, as such an exercise would create synergies for the companies' property businesses. For instance, SunCity's would then be able to draw on Sunway's construction, building materials, and trading operations, resulting in meaningful cost savings for the group.

The potential merger would also create a larger entity, with enhanced liquidity for the group's accelerated business growth.

According to Maybank Investment Bank Bhd's property analyst, Wong Wei Sum, the potential merger would likely result in a combined market value of RM3.46bil for the enlarged group. On top of that, the exercise would also result in the enlarged group having a combined land bank totalling 2,642 acres and a gross development value of projects worth a total of RM25bil.

Analysts were non-committal, though, on which of the two entities would emerge as the holding company from the potential deal, but they were pretty sure that no third-party would come into the picture.

The potential merger between SunCity and Sunway seemed to coincide with the recent flurry of mergers and acquisitions (M&As), involving several major players in the local property and construction industry.

According to analysts, a consolidation trend was seen emerging in the industry as players attempt to enlarge their market capitalisation to boost their capacity, while minimising competition, to bid for larger projects be it in the local market (particularly those under the 10th Malaysia Plan) or overseas.

For instance, IJM Land Bhd and Malaysian Resources Corp Bhd (MRCB) yesterday signed a memorandum of understanding to merge in an exercise seen by many as a move to leverage on each other's strengths, while boosting their chances of being appointed as the main developer of the prized Rubber Research Institute land in Sungai Buloh.

With MRCB being majority-owned by the Employees Provident Fund, the chances of winning government-rolled out projects are high indeed. Other prized projects to bid for include the extension of the Klang Valley's light rail transit system, new buildings in Putrajaya as well as the cleaning up of the Klang river.

Less than a month ago, UEM Land Holdings Bhd and Sunrise Bhd had already embarked on an M&A route, with the former proposing to take over the latter to boost its land bank and diversify its product offerings into high-rise residential and integrated commercial development.

The proposed acquisition would also enable UEM Land to capitalise on Sunrise's strong brand and expertise to enhance its market position in the industry and enhance its appeal to high-end local and foreign buyers.

By The Star

Sunway and SunCity shares suspended on merger talks

SHARES of Sunway Holdings Bhd and Sunway City Bhd (SunCity) have been suspended from trading amid speculation that they may be merged.

The construction and property firms, controlled by Tan Sri Jeffrey Cheah, asked for their shares to be suspended from yesterday until 5pm today, pending a material announcement.

They will be merged into a new company via an exchange of shares and cash, Dow Jones newswires reported yesterday, citing an unnamed source.

The new company will continue to be controlled by Cheah, it added.
If a merger were to happen, it would be the third property merger to be announced this month.

Sunway Holdings was last traded at RM2.25 and SunCity, at RM4.49.

By Business Times