Encorp confident of Melaka project

PETALING JAYA (June 16): Encorp Bhd is confident of its integrated township development project in Bukit Katil, Melaka, in spite of the soft property market.

Its chairman Tan Sri Isa Samad said the project will be a strategically placed development. The project is on 640.98 acres (259.4ha) of land, which is one of the largest parcels available in Melaka now.

“That is the only land available there. To us, it is very good. It is a very strategic place,” he told reporters after the company’s annual general meeting and extraordinary general meeting here.

“We are quite confident. All the consultants also said this is a good project,” he added.

Asked on why Encorp decided to buy the land from Federal Land Development Authority (Felda), Isa explained that Encorp was not able to develop the tract when it was owned by Felda previously.

In January, Encorp paid RM583.6 million cash for the development rights of the land. The amount would be settled through a deferred payment scheme that spreads over 13 years.

“Encorp belongs to Felda. Not much difference. It is just from left pocket to right pocket,” he added.

The 640.98 acres of leasehold land belong to Felda, which holds a 70.97% equity stake in Encorp through Felda Investment Corporation Sdn Bhd (FIC).

Construction of the project, to be developed in three phases with a mixture of residential and commercial properties built in a 80:20 ratio, will begin in the third quarter of next year.

The first phase of the project is expected to be completed in two years, Isa said.

The gross development value of the project was initially pegged at RM4.9 billion, but was cut down to RM3.2 billion in view of the soft property market.

Encorp has fared well since FIC bought into the company in May 2014. For the financial year ended Dec 31, 2015 (FY15), Encorp posted a net profit of RM7.78 million, down from RM10.52 million in the previous year. Revenue dropped to RM209.88 million from RM330.38 million in FY14.

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This article first appeared in The Edge Financial Daily, on June 16, 2016. Subscribe to The Edge Financial Daily here.