Chew Chiaw HanKUALA LUMPUR (Jan 23): Sarawak-based property developer Ibraco Bhd, known for its range of upscale residential and commercial property projects, is recalibrating its product portfolio to include more affordable housing.

In an email interview with The Edge Financial Daily, its managing director Chew Chiaw Han (pictured) said that the group has submitted its new development plans to the State Planning Authority to focus on homes catering to the needs of low- to moderate-income households.

The move, he said, was made not only to meet the needs of genuine homebuyers looking for homes but also to give the group a competitive edge in a challenging market, seeing that consumer confidence has deteriorated.

“In view of the weakening market sentiment over the past two years, we reviewed our approved development plans and decided to change certain components to develop affordable homes,” said Chew.

“We have resubmitted our development plans to the State Planning Authority. [If everything goes well,] this would help us gain [a] bigger competitive advantage,” he said.

Ibraco saw its net profit in the third financial quarter ended Sept 30, 2016 (3QFY2016) plunge 61.1% to RM4.36 million from RM11.2 million a year earlier. Revenue too took a dive, dropping 46.6% to RM32.43 million from RM60.76 million year-on-year.

The group attributed slower sales, lower completion status of certain projects — on top of lesser other income, higher administration expenses and finance costs — to the decline.

“After the submission [to the State Planning Authority], a few launches which we had in the pipeline were deferred to 4QFY2016. However, we managed to roll out a few launches as planned and the responses were satisfactory despite the current sentiment,” Chew said.

Still, these projects, which comprise high-rise residential properties with commercial podiums as well as commercial buildings in Kuching and Bintulu, Sarawak, are not expected to contribute significantly to Ibraco’s earnings this year.

“We are not expecting to recognise full income from these projects until after the first half of 2017 (1H2017) due to the stages of recognition. We will begin seeing contributions beginning or beyond 2H2017,” Chew iterated.

As one of the pioneer developers in Sarawak, it has kept itself secluded within the state since 1974 before venturing into Peninsular Malaysia in 2015 to develop the “Continew”, a two-tower commercial-cum-residential development located along Jalan Tun Razak and Jalan Loke Yew in Kuala Lumpur.

Continew houses 510 apartment suites, with sizes ranging between 550 sq ft (51.1 sq m) and 1,200 sq ft, two sky gardens, eight hanging gardens and four sky decks.

On the status of completion, Chew said that the group kick-started piling works in October 2016 and aims to complete the project by January 2022.

In the meantime, market response in terms of bookings has been satisfactory, he said.

In FY16, Ibraco locked in unbilled sales of RM215 million for its projects.

On plans for future developments, Ibraco stressed that it will continue developing both strata and non-strata properties, mostly in Kuching and Bintulu as the two divisions are Sarawak’s current property hotspots.

For one, the property developer will begin developing its major integrated development “Northbank”, which entails a business park as well as guarded residential and commercial buildings, in Kuching by 3QFY2017.

Northbank carries an estimated gross development value (GDV) of RM1.5 billion and is expected to be completed by 2027.

For the Peninsular Malaysia market, the group said that it will continue focusing on Kuala Lumpur. “We are negotiating with several parties for more projects and will disclose the relevant information once we have concluded the deals,” Chew said.

Ibraco has a landbank of 627 acres (253.74ha) across Kuching, Bintulu and Kuala Lumpur with a collective GDV of RM5.55 billion.

Amid the shaky economy, Ibraco said it will stick to its consumer-first approach to add value to its properties, whereby future projects will cater to the needs of buyers in terms of security and amenities.

“We expect the property market to remain sluggish this year but at the same time, we remain optimistic that the sector will recover,” said Chew.

“We believe there will always be demand for new homes in times of downturn. We adopt a prudent approach to line up the right product mix in our launches to suit the needs of the market,” he added.

Ibraco’s largest shareholder is real estate developer Hiap Ghee Seng Sdn Bhd with a 26.31% stake, followed by Sharifah Deborah Sophia Ibrahim with 20.02%.

Sharifah Deborah is a non-independent non-executive director of Ibraco. She was previously an executive director.

Ibraco shares are thinly traded. They closed unchanged at 95 sen last Friday, with a market capitalisation of RM471.6 million.

Volume picked up to 1.38 million shares last Friday, compared with its one-year average of 41,062 shares.

This article first appeared in The Edge Financial Daily, on Jan 23, 2017. Subscribe to The Edge Financial Daily here.

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