KUALA LUMPUR (Aug 25): Hua Yang Bhd, which expects flat earnings growth in the current financial year ending March 31, 2017 (FY17), said it aims to pay out 25% to 30% of its net profit as dividends while conserving cash for landbank replenishment.

Its chief executive officer and executive director Ho Wen Yan said Hua Yang does not have a dividend policy, but it generally aims to pay back 25% to 30% of its net profit to reward shareholders.

“In some years, we may cut back [the dividend amount] for strategic purposes. This year, hopefully, we can still keep to the 25% to 30% [target],” he said after the group’s annual general meeting yesterday.

The company cut back its dividend to five sen in FY16, but announced a one-for-three bonus issue.

Ho said Hua Yang hopes to conserve some cash to expand its land bank in the Klang Valley and Penang.

The group has available landbank of 531 acres (214.89ha) in Penang, the Klang Valley, Ipoh and Johor, which can potentially generate a total estimated gross development value (GDV) of RM4 billion.

Ho is confident of achieving Hua Yang’s property sales target of RM500 million for FY17, underpinned by two launches with a combined GDV of RM692 million in the second half of this year. The group only achieved sales of RM53.2 million in the first financial quarter ended June 30, 2016 (1QFY17).

“In the first two quarters of this year, we held off a lot of new launches. However, for the subsequent third and fourth quarters, we think the market will be ready [for new launches],” he said. The projects that the group aims to roll out are two serviced apartment projects, in the Klang Valley and Penang, with an estimated GDV of RM368 million and RM324 million respectively.

Underpinned by new launches and unbilled sales of RM431 million, Ho believes the group could maintain its financial performance in FY17. In 1QFY17, Hua Yang’s net profit fell 20% to RM23.91 million, while revenue dropped 10.3% to RM127.96 million, from RM142.57 million in 1QFY16.

“We expect market conditions to be challenging for the rest of this year [and] maybe into the first half of 2017. But I think all expectations have been factored in,” he said.

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This article first appeared in The Edge Financial Daily, on Aug 25, 2016. Subscribe to The Edge Financial Daily here.

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