KUALA LUMPUR (Aug 28): Property developer Yong Tai Bhd expects its tourism business segment to contribute up to 40% of its revenue starting financial year ending June 30, 2019 (FY19), with the property development business segment taking up the rest.
Currently, 100% of its revenue comes from the property development business segment.
Its chief executive officer Datuk Boo Kuang Loon said the Impression Melaka theatre will start contributing to the group’s tourism revenue in FY18 when it opens its doors in February.
“Impression Melaka is expected to contribute at least RM60 million in net profit per year. For FY18, however, the theatre’s contribution will be about RM10 million after recognising the initial set-up cost,” he told reporters after an analyst and fund manager briefing last Friday.
“We expect to report sustained earnings growth in FY18 on the back of [contribution from] the Impression Melaka theatre, which will provide us with recurring income,” Boo said.
The Impression Melaka theatre will be a major catalyst to boost the strong demand for properties in Yong Tai’s Impression City Melaka development, a RM7 billion mixed project which features residential properties, education centre, hotels, shopping mall, commercial lots and office towers.
Boo said three of its ongoing developments in Impression City Melaka, namely Terra Square, Amber Cove and The Apple — will also contribute to the group’s net profit in FY18.
The group’s net profit surged 80% to RM6.59 million in FY17 from RM3.67 million in FY16, while revenue rose nearly five times to RM87.61 million from RM17.94 million, mainly due to the en-bloc sale of 262 retail units of the Terra Square mall. Progress billings from the advance stage of construction of The Apple project also contributed to the strong performance.
Boo said Yong Tai is expecting to generate new sales of RM1 billion per year from projects including Impression City Melaka, which spans over eight to 10 years.
When asked about the locals’ response to Impression City Melaka, Boo said: “So far, if you ask the Malaccans, [they’re] hoping for this project to quickly be developed. Because [they see it as] one of the pull factors to drive the Melaka economy.”
Currently, Yong Tai has a landbank of 138 acres (55.85ha) in Melaka and about 2.3 acres in the Klang Valley.
Boo also said its projects located in Jalan U-Thant and the Bukit Bintang area in Kuala Lumpur, which have an estimated gross development value of RM1.2 billion, will start contributing to the group’s net profit from FY19.
Following the disposal of the discontinued textile and garment businesses in the fourth quarter of FY17, the group is now a full-fledged tourism-related property developer.
Yong Tai shares closed up three sen or 2.1% at RM1.46 last Friday, with a market capitalisation of RM636.1 million.
This article first appeared in The Edge Financial Daily, on Aug 28, 2017.