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OSK to have fewer property launches this year

KUALA LUMPUR (April 30): OSK Holdings Bhd is planning fewer property launches for this year amid the challenging market sentiment, with the projects having a combined gross development value (GDV) of RM311.9 million, group managing director Ong Ju Yan said.

The projects scheduled for launch in 2020 are Iringan Bayu Mekary Phase 3B, comprising double-storey terrace homes, and Phase 3C, comprising single-storey terrace homes, in Seremban, Negeri Sembilan, as well as Bandar Puteri Jaya Precincts 4 and 5 in Sungai Petani, Kedah.

“We foresee financial year 2020 to remain challenging for the property development division due to the lacklustre property market with continued challenges in the ability of purchasers to obtain end-financing, amidst concerns of a property supply overhang,” he said in the diversified group’s 2019 annual report released yesterday.

For the financial year ended Dec 31, 2019 (FY19), OSK’s property development division recorded revenue of RM714.3 million — nearly 60% of the group’s total revenue — and contributed 43% or RM200 million to the group’s profit before tax. 

Ong noted that while the division emphasised on selling its unsold inventories in ongoing and completed projects through effective marketing strategies, the conglomerate would continue to develop innovative products that met the needs of prospective buyers and at the same time focus its efforts on cost optimisation.

“Our team will focus on delivering properties launched and sold in FY18 and FY19 which should generate a healthy level of profits for our property division in FY20,” he added.

The group will continue to pursue strategic land banking opportunities for long-term growth.

As at end FY19, the OSK group has a land bank of 592.45 hectares of developable land with an estimated GDV of RM10.5 billion in Malaysia, and an effective GDV of RM2.3 billion in Melbourne, Australia, representing OSK’s share in the Melbourne Square mixed-use development project.

On its hospitality division, OSK said the group temporarily closed all its premises on March 18, 2020, except those which provided essential services to the public during the Movement Control Order (MCO) period.

“It is worth mentioning that three of our hotels under Swiss-Garden International have been selected as quarantine centres for the Ministry of Health,” it noted.

In Australia, OSK’s Melbourne-based associate company Yarra Park City also fully abided by the Limited Restriction order that was implemented since mid-March 2020 by the Australian government.

In his statement in the report, executive chairman Tan Sri Ong Leong Huat said the crisis proved to be a test of resilience and preparedness for many companies across the world.

“While we are thankful that most of our businesses have resumed operations during the third phase of the MCO, we also recognise the prevailing uncertainty in the global economy as the fight against Covid-19 continues.

“The group remains prudent in leading the organisation through this crisis by strengthening our ongoing precautionary and business recovery measures moving forward,” he added.

At the close yesterday, shares of OSK rose 2.5 sen, or 3.2%, to 80 sen.

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