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Monday, January 23, 2012

L&G set to shine again

Low with a model of Damansara Foresta.

Last week, Land & General Bhd (L&G) soft-launched its condominium project, Damansara Foresta, in Bandar Sri Damansara, Petaling Jaya. That launch was significant in many ways.

L&G is an old brand that became a casualty of the 1997/98 Asian financial crisis. Bandar Sri Damansara is its old turf, having made a name for itself when it built the township with some 14,000 households decades ago.

The company fell victim to the crisis because it had a cashflow problem and became insolvent. It also had massive debts. It was also involved in a variety of businesses and owned properties in different parts of the world that it was not able to fully concentrate on.

Like other companies that fell during that period, L&G’s fall from grace revealed its many weaknesses, which had earlier went unnoticed.

The whole unfortunate affair culminated with the resignation of its captain, Tan Sri Wan Azmi Wan Hamzah, in 2002 from the debt-laden property group.

In 2007, Hong Kong-based property tycoon Tan Sri David Chiu became a substantial shareholder of L&G with an 8.35% stake through Mayland Parkview Sdn Bhd. That stake has grown to 16.94% today. His entry sparked speculation of a possible asset injection or takeover exercise. It pushed the stock up from 20 sen to over 80 sen in six months.

But there was no asset injection. Instead, the new management under managing director Low Gay Teck spent the last several years quietly cleaning house and strengthening the foundations of the company.

When L&G, under Low, launched commercial project 8trium in Bandar Sri Damansara, buyers were sceptical about the company. Does it has the financial muscle to pull it off? Today, that project is more than 95% sold and in about three months, it will be completed.

When it launched its Damansara Foresta condominium project (with gross development value of RM700mil), this skepticism was not evident anymore.

Low is a property man. He was with Mayland with Chiu for many years and has helped build up Mayland’s name in the Plaza Damas area in Sri Hartamas. But while Mayland concentrates on studio units of about 500 sq ft, L&G prefers the 1,400 to 1,600 sq ft range as can be seen in the recent launch.

While property development will remain its core business, contributing about 70% to the group’s revenue, L&G also inherited the education business in the form of private school Sri Bistari.

The last several years has seen student enrolment double to about 1,100. Low has never been in the education business but he seems willing to take what the company has inherited and to make the most of it. Today, revenue from its education business amounted to about RM5.7mil (19% of total revenue of RM28.7mil) for the six-month period ended Sept 30, 2011, according to filings with Bursa Malaysia.

Total contribution from the property division amounted to RM17mil (66% of total revenue) and looking ahead, property will be the company’s main business for the next decade or so.

L&G also has a bit of oil palm plantation (about 1,010ha) which it inherited from the previous management in the Lembah Beringin area, its previous township development during its heyday. There are plans to fully make use of that piece of land with new plantings.

The company has other sources of revenue of about RM7mil but at press time, it is uncertain whether this RM7mil is a contribution from the plantation business.

The recent launch of Damansara Foresta is interesting because that project is only one part of that 40 over acres in Sri Damansara. The entire gross development value of the 40-odd acres will be about RM2bil. As mentioned earlier, L&G made its name in Bandar Sri Damansara and it looks like it will continue to rebuild its name and branding in that location.

With that land size, the project will take several years to complete and the profit margins should be good as it owns the land, having bought it decades ago. Its recent launch was priced between RM500 and RM600 per sq ft.

L&G also has two other pieces of land, including about 25 acres in the Bandar Sri Damansara clubhouse area, but it will have to solve the membership issue of that clubhouse first.

Last year, it bought about 200 acres in Seremban and has to date submitted its development plans to the local authorities there. The Seremban land will be used for a mixed residential project with terraced, semi-detached and cluster homes priced at about RM300,000 for the terraced houses.

Although it plans to have predominantly landed housing for the Seremban land, L&G will very probably focus on condominium projects for its overall property business in order to slowly get back on its feet. It also has a joint-venture development with the Mayland group at Jalan Ampang known as Elements@Ampang with a GDV of RM700mil.

The company’s total borrowings amounted to RM68.58mil, while its cash and cash equivalents totalled about RM140mil as at Sept 30, 2011. It took a bridging loan of about RM90mil for Damansara Foresta, which is about 50% sold to date.

As mentioned earlier, when the new management came in in 2007, speculation drove L&G’s share price up to about 80 sen a share. Today, it is between 30 and 40 sen. Its shareholding seems rather fragmented, with Wan Azmi having a 2.13% stake.

Now that Low and his team have cleaned up the company, things are moving again.

By The Star

Legoland Malaysia expects a million visitors in first year

JOHOR BARU: Legoland Malaysia is projecting its nearly-completed theme park to attract a million visitors during its first year of operation.

Its general manager Siegfried Boerst said the theme park will be officially opened in the second quarter of this year.

"We are looking at more than one million visitors for the first 12 months of operation, and we hope it increases all the time," he told reporters after the unveiling of Legoland Malaysia's dragon mascot made entirely of Lego bricks called "Ollie The Dragon" at Thistle Hotel here on Friday.

The model took 50-man hours to build from approximately 10,000 Lego bricks.

Boerst said construction of the RM700 million theme park is progressing well despite the rainy season affecting Johor, adding he is confident it will be completed on time.

Legoland Malaysia, he said, is planning public relations activities in Malaysia and several other East Asian countries including Singapore and Indonesia leading up to the theme park's official opening, adding it is also developing Johor as a tourist destination.

On the annual pass ticket sales, he said Legoland Malaysia is happy with the response, with its counters selling more than 300 passes daily, with Malaysians making up 80 per cent of the buyers, although the operator is hoping to attract more Singaporean buyers.

"We have registered several thousand annual pass sales, and we intend to keep it open for a few more weeks," he said.

The annual passes, sold at a discounted price of RM195 (adult) and RM150 (children), are valid right into the end of 2013.

Tickets are available online through the AirAsia RedTix and Legoland Malaysia websites.

Legoland Malaysia, the world's sixth Legoland and Asia's first, is located in Iskandar Malaysia and will feature more than 40 interactive rides, shows and attractions when it opens.

Other Legoland theme parks across the world are in Denmark, the UK, Germany and Florida and California in the US.

By Bernama