I-Bhd hopes to triple revenue over next four years

KUALA LUMPUR: I-Bhd, in its bid to triple sales over the next three to four years, yesterday unveiled plans for its Central Tower mixed development, comprising residential serviced suites, a hotel tower and an office tower with a total gross floor area of 1.6 million sq ft. The Central Tower development will be integrated with the adjacent CentralPlaza@i-City shopping mall via pedestrian linkages. Initially, the development of the office and hotel towers and the shopping mall was supposed to be on the same site. With this grander blueprint, the household appliance manufacturer-turned-property developer hopes to generate annual revenue of between RM500 million and RM600 million from its property development segment. “Last year (FY13), we earned only about RM95 million of revenue from our property development segment. To build up [to this target], we need new launches. The challenge is not to find where to build these projects, but to ensure there is constant new launches,” said I-Bhd deputy chairman Datuk Eu Hong Chew at the unveiling ceremony of the project yesterday. These developments will have an estimated gross development value (GDV) of RM1.8 billion, with the towers alone constituting RM1.2 billion. There will be four towers in total after taking into account two residential towers in the first phase of the development, which is slated for completion in 2019. Both Central Tower and CentralPlaza@i-City shopping mall projects will have a joint ground-breaking ceremony. The shopping mall development, in which I-Bhd has a 60% stake, is expected to be completed in 2017. The hotel and office towers at Central Tower were supposed to be a part of CentralPlaza@i-City under the previous plan. However, this changed when Thailand’s largest retail property developer, Central Pattana plc, came into the picture and took a 40% stake. The shopping mall will have one million sq ft of net lettable area. The land where Central Tower will be built was injected by I-Bhd executive chairman Tan Sri Lim Kim Hong as part of the group’s corporate exercise last year. The land was previously parked under Lim’s company The Peak @ KLCC Sdn Bhd. As I-Bhd had ceded its development rights over the mall land in favour of its joint-venture vehicle with Central Pattana, I-Bhd will get a net disposal gain of RM20 million. The cash proceeds will be received over a two-year period, and utilised for I-Bhd’s working capital purposes and partial funding of the development of common infrastructure. Eu said the group expects to derive rental income from its property investment, which he hopes will have an asset value of RM1 billion over the next five years. As at the end of last year, the segment’s revenue was close to RM8 million. “Eventually, the property investment segment will be a big revenue contributor. Once we have RM1 billion worth of property, we will get a sizeable return based on a 5% to 6% yield.” I-Bhd recorded a 161.44% rise in net profit from FY12’s RM16.82 million, while revenue more than doubled from the previous year’s RM66.66 million. Correspondingly, its stock grew 48.06% over the past year, and its price closed at RM3.05 yesterday. This article first appeared in The Edge Financial Daily, on April 16, 2014.

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