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Thursday, July 21, 2011

Sunway City - The most profitable company in the property and REIT sectors

From left to right: The Edge chairman Datuk Tong Kooi Ong; Minister at the Prime Minister's Department Yang Berhormat Datuk Seri Idris Jala; Sunway City Berhad director of strategic & corporate development Sarena Cheah and OCBC Bank (Malaysia) director and CEO Jeffrey Chew.

Sunway City Berhad (Sunway City) was recognized at the Edge Billion Ringgit Club Corporate Awards Gala Dinner 2011 as the most profitable company with highest return of equity over three years in the property and REIT sectors. Sunway City received the award from Minister at the Prime Minister’s Department, Yang Berhormat Datuk Seri Idris Jala who graced the prestigious event held at the Shangri-La.

The Edge Billion Ringgit Club (BRC) inductees are the best companies listed on Bursa Malaysia with at least RM1 billion in terms of market capitalisation on March 31 each year, or turnover for the immediate preceding year. Sunway City, Sunway Holdings Berhad and Sunway REIT are members of The Edge Billion Ringgit Club 2011. While membership in the Edge Billion Ringgit Club is automatically open to companies that meet the criteria, the awards are based on performance.

Sunway City was incorporated as a private limited company in Malaysia in 1982, and was converted to a public listed company in 1995 and currently has a market capitalization of over RM2.3 billion. Last year, Sunway City had made its mark in the industry by becoming the first integrated real estate conglomerate when it successfully listed Sunway REIT on the Main Market on the Bursa Malaysia – the largest REIT in Malaysia in terms of market cap and asset value. Today, it has a market capitalization of RM3.0 billion.

The company’s major financial achievements include a surge of 143% in share price from Jan 1 2007 to June 30 2011, from RM 2.21 to RM 5.38. Profit attributable to equity holders (PATMI) had increased from RM 155.8 mil in FYE 30 June 2007 to RM 542 mil in FYE 31 Dec 2010, while basic earnings per share increased from 35.19 sen in FYE 20 June 2007 to 115.32 sen in FYE 31 Dec 2010 representing a CAGR of over 40% p.a. Net assets per share grew from RM3.06 per share in FYE 30 June 2007 to RM 5.53 per share in FYE 31 Dec 2010 representing a CAGR of approx 20% p.a. It had rewarded its shareholders with the highest gross dividend declared since its listing amounting to 31 sen per share for FYE 31 Dec 2010.

“We are privileged indeed to receive this recognition which underscores Sunway City’s commitment to deliver and create value for our shareholders. We attribute our extraordinary performance to visionary leadership, perceptive and transparent corporate policies; as well as synergistic and passionate teamwork which compound the bulwark of the company’s continuous progress,” said Sunway City Berhad managing director - property investment Datuk Ngeow Voon Yean.

“Sunway City will continue to strive to perform all our economic functions in the most efficient and productive manner, employing optimal use of current technology. We will continue to protect our shareholder’s investments, and provide them a sustainable return, and give them confidence in our corporate governance through transparency and accountability,” said Sunway City Berhad managing director - property development, Malaysia Ho Hon Sang.

“The merger between Sunway City and Sunway Holdings will unlock even more value for all shareholders through the creation of a streamlined platform for expansion of the property and construction businesses, as well as realisation of synergies within the Group,” he added.

Sunway Berhad, as a result of the merger, is expected to be listed on the Main Market of Bursa Malaysia in August. The exercise will create a single, more sizeable integrated regional property-construction player which shall create economies of scale and synergies as well as greater brand clarity for going to market and to attract talent.

The new entity will be one of the largest property-construction players with strong presence in the region, with total assets amounting to RM7bil, a land bank of 2,200 acres with a total GDV of approximately RM 25bil and a market capitalization of over RM 3.5bil, propelling Sunway to be one of the top five property and construction companies listed on Bursa by market cap.

The enlarged entity will translate to an optimized access to capital markets through an expected increase in liquidity which will command greater investor interest. The company is also expected to enjoy lower financing cost with enhanced cash management. It’s larger and stronger balance sheet will also empower the Group to bid for larger and more profitable projects.

By The Star

Another KLCC Prop mixed project in the works

Kuala Lumpur: With the completion of Lot C by the end of this year, KLCC Property Holdings Bhd will be looking at the development of Lot D1, another 0.6ha plot of land adjacent to Hotel Mandarin Oriental.

A development plan for the area is only expected to be finalised in about a year.

"As usual, this is a mixed development and the trend for us is to have a mixed component of retail and service apartment or retail and office, depending on the demand at that time," its chief executive officer Hashim Wahir said after KLCC Property's annual general meeting yesterday.

As part of its risk management measures, KLCC Property only begins building once tenancy and clients for a development have been firmed up.

KLCC Property expects to complete the development of the office tower in Lot C year-end.

Petroliam Nasional Bhd (Petronas), which will be the sole tenant of the office tower with a net lettable area of 840,000 square feet (sq ft), is likely to move in early 2012. The tower will be known as Petronas Tower 3.

The retail component of the development has already been handed over to Suria KLCC Sdn Bhd and some 22 tenants have already signed up.

Full occupancy of the 140,000sq ft net lettable area is likely by September this year.

The retail and office components of the development are set to contribute about RM100 million a year to the group once fully occupied.

KLCC Property is also undertaking a refurbishment exercise of Menara Dayabumi, a 26-year-old and 36-storey office building. Between RM30 million and RM40 million will be spent for the two-stage refurbishment work which is expected to be completed by the end of the year.

Another plan in the works is the redevelopment of City Point, a six-storey office-cum-retail-podium annexed to Menara Dayabumi.

"We hope to redevelop it to have additional office space and make the retail space more exciting," Hashim said.

By Business Times

Short-term impact on property sales

PETALING JAYA: CIMB Research expects the proposal by Bank Negara to modify the mode of calculation for household loans to curb domestic speculation in the local property sector to have only a short-term impact.

“We think that any measures to curb domestic speculation are likely to have only a short-lived impact on physical property sales, as was the case when a flat 5% RPGT (real property gains tax) was levied in October 2009 and an LTV (loan-to-value) ratio of 70% was imposed on the third-property purchase in November 2010.

“In both cases, the impact on the real property market was a wait-and-see attitude by buyers for two to three months before they rushed back into the market when they realised that house prices were firm and still rising,” it said yesterday.

The research report was in reference to a recent local news story which reported that the central bank had issued a white paper to obtain feedback on the possibility of basing the calculation of household loans (mortgage and hire purchase) on net pay instead of gross pay.

“The report is yet to be confirmed and even if the measure is implemented, we believe it could be mild as the intention is to curb speculation, not hammer overall sentiment.

“Even if we assume the worst-case scenario where a change in the calculation results in a 26% fall in affordability, in line with the maximum personal tax rate, the affordability ratio is still very healthy,” said CIMB.

CIMB noted that a share prices of property stocks had been on a downtrend since the news report, which also spilled over to construction companies with significant property exposure.

The research house believes that the Government would be careful not to implement measures that would have too negative an impact on the property sector as it would still want to encourage home ownership, and restrictions would have the opposite effect.

“The Government hopes to unlock the value of its idle land in the Klang Valley and measures that would hurt the sector could result in lower bids for the land, and the performance of the property sector affects other key sectors of the economy and property restrictions in the run-up to general elections may not be popular,” it said.

By The Star

UDA aborts plan to sell land

PETALING JAYA: UDA Holdings Bhd is terminating the proposed sale of a 3.56 acres land along Jalan Sultan Ismail in Kuala Lumpur for RM215.5mil to Nadayu Properties Bhd.

Nadayu, formerly known as Mutiara Goodyear Development Bhd, told Bursa Malaysia yesterday that its solicitors had received a letter from UDA, cancelling the deal.

UDA said in its letter, it was unable to get the approval of its shareholder for the proposed acquisition, adding that it planned to terminate the sales and purchase agreement and refund the 10% deposit of the purchase price amounting to RM21,550, to the Nadayu in due course.

By The Star

UDA shareholder rejects land buy

NADAYU Properties Bhd, formerly known as Mutiara Goodyear Development Bhd, said UDA Holdings Bhd’s shareholder has rejected its plan to buy land in Kuala Lumpur for RM215.5 million.

Nadayu said it will seek clarification and make an appeal to UDA, a government-owned company.

By Business Times