UEM Sunrise wants to buy more land

Posted on May 22, 2015  | 832 views |  Topic : Featured, Investment, Property News.

Property developer allocating RM500mil for this purpose

Anwar: ‘Depending on what we identify, the payment can be spread over time.’

BY CHERYL POO
cherylpoo@thestar.com.my

PETALING JAYA: UEM Sunrise Bhd will focus on land banking this year with its RM500mil-per year cash allocation for land acquisition over the next three to four years.

“Depending on what we identify, the payment can be spread over time. We don’t have a set limit, so if the price is higher than expected, we will manage the terms of payment based on progress,” managing director and chief executive officer Anwar Syahrin Abdul Ajib told the press after the company’s AGM.

Anwar said the property developer was working hard this year to manage its cash flow, which was negative last year.

Buying land would not be a problem, as the company’s net gearing stood at 0.27 times. However, it has to improve working capital management, especially on receivables.

“For example, we have to manage contractors better,” Anwar said.

In order to broaden its geographical offerings, UEM Sunrise, which is the master developer of Nusajaya – one of five flagship zones of Iskandar Malaysia – is looking to buy land in the Klang Valley, Sabah and Sarawak.

The property developer said it would tread cautiously, given the situation of oversupply in Johor.

“We are watching very carefully certain segments that display signs of oversupply.

“That’s why landbanking is very important to us,” said Anwar.

“There’s a peak and downturn in every property cycle, so we must be prepared to weather the downturn. That is why in this year’s launches, we feature a good mix of high-end products as well as affordables in the Southern region.”

For the first quarter ended March 31, 2015, UEM Sunrise posted a net profit of RM53.1mil, 13.7% lower than RM61.5mil last year due to higher selling cost in the development of Aurora Melbourne Central project in Australia and lower contribution from associates and joint ventures (JVs).

Revenue was at RM417.4mil, 3.9% higher than the RM401.6mil of last year, primarily due to higher revenue from construction progress made from the Teega and Arcoris projects, and the completion of the Summer Suites project in the current-year quarter.

Currently, the company has a total land bank of 14,600 acres locally and overseas, with an estimated remaining gross development value (GDV) of RM103bil, including JV projects, Anwar said. Out of this, 77% is in Johor.

“We also have a good pipeline of international products we can launch over the year to sustain our financial performance,” Anwar said.

“Apart from its Johor offerings, UEM Sunrise expects continued income from its overseas developments such as its Aurora Melbourne Central over the next three to five years, as only the residential component has been launched.

“There is still the retail, commercial and serviced apartment/hotel component with an estimated GDV of A$180mil (RM511.9mil), as well as the launch of The Conservatory, a high-rise residential mixed development in Melbourne with an estimated GDV of A$200.6mil (RM570.48mil).

For 2015, UEM Sunrise has targeted sales of RM2bil, which it hopes to achieve with new launches as well as existing products after some repackaging.

Last year, the group recorded 20% higher property development sales than the revised sales target of RM2bil, of which RM1.498bil came from international projects and RM945mil from the central and southern region in Malaysia.

Speaking on how the 11th Malaysia Plan, which was announced yesterday, would benefit UEM Sunrise, chairman Tan Sri Dr Ahmad Tajuddin Ali said there would be some benefits from the Gemas-Johor double-tracking railway project.

“We would benefit from that, but more so, we would benefit from the high-speed rail project which will pass through Nusajaya before Tuas,“ he said.

Meanwhile, the company’s tussle with Bank Kerjasama Rakyat Malaysia Bhd’s subsidiary, Rakyat Holdings Sdn Bhd, for the recovery of Bangunan Angkasaraya at Jalan Ampang was being ironed out, Anwar said.

“We are talking to them for an amicable solution. Discussions have been positive because both parties are eager to move forward. Hopefully, this can be settled by the year-end,” he said.

For more information on Building and Construction event, please visit www.asiapacificevents.com