Ho Hup closer to PN17 upliftment

KUALA LUMPUR: Ho Hup Construction Co Bhd expects its Practice Note 17 (PN17) classification (for financially distressed companies) to be uplifted by next year after the completion of its regularisation plan by October.

The company said it will apply to Bursa Malaysia for the upliftment following two consecutive quarters of profit (upon completion of its financial regularisation plan) by October.

“All our businesses are performing up to expectations,” said executive director Derek Wong Kit Leong, adding that he is optimistic on the group’s performance for its financial year ending Dec 31, 2013.

Last year, Ho Hup launched a project comprising shop offices and retail lots on a 10-acre (4.04ha) site in Bukit Jalil, Kuala Lumpur.

“It was successful,” said Wong, adding that the take-up rate for the commercial properties is almost 90% with total sales of RM260 million.

The three-four-and five-storey offices on five acres out of the 10 acres bear a gross development value (GDV) of RM400 million, he added.

Ho Hup also plans to develop a hybrid mall, apartments, “small offices versatile offices” (sovos) and condominiums on the 10-acre plot.

Bukit Jalil Development Sdn Bhd (BJD), 70% owned by Ho Hup, is responsible for developing the land.

Wong added that there will be another (50-acre) mixed development in Bukit Jalil, which will be jointly developed with Malton Bhd over 10 years. BJD is entitled to 18% of the estimated GDV, subject to a minimum of RM220 million.

“It was a fair deal at the point of time.

“We predict that the first launch for this plot of land will be in the first quarter of next year,” Wong said.

Malton executive chairman Datuk Desmond Lim Siew Choon had said the company planned to build a mall named “Pavilion 2” on the 50-acre plot.

“It’s going to be a very big and iconic mall,” said Wong, adding that the mall will have a net lettable area of two million sq ft.

On the competition between Pavilion 2 and Ho Hup’s hybrid mall in Bukit Jalil, Wong said he did not see any conflict.

As for its construction business, Ho Hup has submitted bids for about RM3 billion worth of projects comprising infrastructure jobs and treatment plants locally and overseas.

The company’s current orderbook stands at RM500 million, said Wong.

Ho Hup has also expanded its ready-mix concrete division by setting up new batching plants to capture rising demand from the dozens of infrastructure and development projects launched by the government in the Klang Valley.

Tru-mix Concrete Sdn Bhd, a subsidiary of Ho Hup, is expected to benefit from the development projects of the group.

To recap, Ho Hup was first admitted into PN17 in August 2008 for having an inadequate level of operations and financials.

Ho Hup is in the midst of implementing its regularisation plan which should lead to its exit from PN17.

“We need to finalise our circular to shareholders and call for a creditors’ meeting in mid-August,” said Wong. “The majority of our creditors have no problem with the scheme.”

This article first appeared in The Edge Financial Daily, on June 28, 2013.



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