KUALA LUMPUR (Jan 24): Having successfully diversified into the construction business, timber products company NWP Holdings Bhd is venturing into property development too. And the loss-making company hopes to see a turnaround in its current year results.

“We want to use it (NWP) as a platform for property development as well. We are looking at projects in Kuala Lumpur and Melaka,” said chief executive officer (CEO) Datuk Seri Nelson Kee Soon Ling.

“The company will venture into property development this year,” he told The Edge Financial Daily on the sidelines of the company’s annual general meeting (AGM) yesterday. “We have sales experience in properties so there is huge potential in the company,” he added, but declined to elaborate on the projects.

Kee, who is also the CEO cum director of real estate agency GS Realty Sdn Bhd, surfaced as a substantial shareholder of NWP, after acquiring 36.74 million shares or an 11.48% stake in May last year in the off-market. He was later appointed as executive director and then redesignated as CEO in November.

Also in November, NWP Builder Sdn Bhd, a wholly-owned subsidiary of NWP, entered into a turnkey construction agreement with Listari Marina (MM2H) Sdn Bhd, for the construction of nine tower blocks with 160 units of serviced suites in Melaka for RM22 million.

Two months earlier, NWP also inked a turnkey construction heads of agreement to undertake six affordable housing projects under Syarikat Perumahan Negara Bhd and Perbadanan PR1MA Malaysia, with an estimated gross development value of RM745 million.

Meanwhile, NWP executive director Wong See Ming said with revenue from the construction business, coupled with higher demand for its timber products, the loss-making company is hopeful of a turnaround in the current year ending Aug 31, 2017 (FY2017).

NWP saw its net loss widen to RM2.99 million in financial year 2016 (FY2016), from RM2.23 million in FY2015. Revenue fell 27.79% to RM12.68 million from RM17.56 million.

Speaking to reporters after the AGM, Wong said the construction business will contribute to its revenue beginning FY2017. “We cannot say in which quarter the revenue will come in and the amount, but we expect the overall margin to be about 15% to 20% for the Melaka project,” he said.

Wong also expects the turnover of its timber products business to grow 15% to 20% in FY2017.

“We are bullish on the timber products business too as we expect demand from our main market, China, will be higher moving forward,” he explained.

With higher labour cost and as factories in China have to comply with more stringent environmental and safety regulations, Wong said China’s timber-related players prefer to buy finished or semi-finished products from Malaysia.

He said NWP is also set to gain from a favourable foreign exchange rate, with a stronger US dollar adding 6% to 7% of its turnover.

The company exports all of its timber products with 80% to China and the balance to the US and Europe.

Meanwhile, NWP, which has entered into an agreement to acquire a 30% stake in Aviation AI Inc for RM6.3 million, is targeting the super-rich for private jet charter service within the Asean region.

“The charges are at US$7,500 (RM33,300) per hour. There is only one Gulfstream airplane stationed in Subang,” said NWP chairman Paulinus Mojiun.

This article first appeared in The Edge Financial Daily, on Jan 24, 2017. Subscribe to The Edge Financial Daily here.

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