KUALA LUMPUR (Feb 12): Kerjaya Prospek Group Bhd expects the local property market will continue to remain soft, but it remains sustainable this year, says its executive chairman Datuk Tee Eng Ho.

"The market cannot keep going up. Sometimes (a) slow (market) is good (as) corrections can make the market more sustainable (and) prices will be reasonable as well. If we keep building, there won't be enough population to absorb the demand," he told a press conference after the group's extraordinary general meeting (EGM) today.

"I still think as long as you have the right product, location and pricing, you still can sell," he added.

"But it is not the same as before (when) during the good times, you sell all (units) in one or two days (and) people queue up for your projects. Today, it may take one or two years to (achieve) about 70% to 80% of take-up, but that is still okay," said Tee.

At Kerjaya, Tee said the management will continue to invest in industrialised building system (IBS) in order for the group to lessen its reliance on manpower.

"Basically, with IBS, we can reduce workforce requirements for a project by 50%. Over the last few years, we have seen a reduction of about 30% (in manpower in a construction project) and in the next two to three years, we can reduce (the figure) by another 10% or more. But that doesn't mean we are going to cut down our workforce. Instead of reducing, we use the same workforce to do more.

"Our overhead now is about 3% of our total revenue compared with the industry's of about 5% and above," he added.

Kerjaya aims to be a construction pure play counter after completing two of its projects in in Gohtong Jaya, Genting Highlands and Shah Alam, Selangor.

Tee said he will continue to retain the property development activities within his private property development outfit under Kerjaya Prospek Property Sdn Bhd moving forward.

"To me, it is better to separate construction and property development, and we will continue to do so because (property) development also requires a lot more cash," he said.

"But what we (Kerjaya) can still do is maybe (undertake) joint ventures with landowners (to undertake property developments).

"Other than that, land acquisitions or other developments will be done under my private vehicle because we have enough cash there for land acquisitions as well. Similar to Kerjaya, we are in net cash (position) in the private business (Kerjaya Prospek Property)," he added.

Kerjaya has a net cash of RM163 million as at Sept 30, 2017.

Kerjaya's 1.4-acre Vista Residences development in Gohtong Jaya has a gross development value of RM300 million, and it was reported that the group plans to launch its next project on its 8.7-acre parcel in Monterez Golf & Country Club in Shah Alam in the first half of next year. The project was deferred from 2017 due to the slowdown in the property market.

Earlier at the EGM, Kerjaya's shareholders unanimously approved the proposed bonus issue of shares and warrants.

On Jan 3, Kerjaya had proposed to undertake a bonus issue of up to 677.44 million new shares in the company on the basis of six bonus shares for every five existing Kerjaya shares held. It had also proposed a bonus issue of up to 169.36 million new warrants in Kerjaya, on the basis of six bonus warrants for every 20 existing Kerjaya shares held on the same entitlement date as the proposed bonus issue.

At 2.45pm, Kerjaya shares were unchanged at RM3.90, with 656,800 shares done, bringing a market capitalisation of RM2.2 billion. — theedgemarkets.com

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