IGB eyes overseas hotels

KUALA LUMPUR: A combination of a stronger ringgit and the depressed economy in some regions have prompted IGB Corp Bhd to go on an acquisition trail.

IGB is planning on expanding its hospitality division by acquiring distressed hotels overseas, said its group managing director Robert Tan.

He said that the company is aggressively looking at acquiring existing hotels in Japan, China and the Indochina region as part of its hotel division’s expansion this year.

“We are taking the opportunity of the depressed market and looking at buying over existing hotels in these countries. At the moment, we are reviewing a lot of proposals,” he said after the group’s AGM here yesterday.

Tan said IGB was in a good position to consider such purchases due to its “strong financial health and low gearing” but would not rush into it.

“There are a lot of options but we are taking the time to pick and choose the right hotels. Location is very important,” he said, adding that it would also look at Europe if the offers are good.

He said that IGB is only looking at buying existing hotels rather than developing new ones.

The hotel division contributes 50% to the group’s profit at the moment, he added.

For the first quarter ended March 31, 2010, IGB’s net profit rose 4.1% to RM35.32 million from RM33.9 million a year earlier, due to the improved performance of the group except its property development division.

Its revenue fell 6% to RM156.1 million from RM165.6 million due to lower contributions from its property development division, it said in a Bursa filing. Earnings per share were 2.42 sen versus 2.31 sen previously.

Going forward, Tan said that the outlook is bright for the property development side this year as its two new launches are doing well.

“Most of our units for the Seri Ampang Hilir Residence and Garden Manor launched this year have been sold,” he said, adding that the two have a combined gross development value of RM150 million.

In addition, IGB would also see its US$30 million (RM 99.6 million) St Giles Makati hotel in Manila opening in three weeks’ time and contribute to the group’s earnings, he said.

On its plans to develop the final phase of Mid Valley City, Tan said it is in the process of submitting the proposal to develop a RM500 million office block on a 500,000 sq ft site, and hopes to get approval by the end of the year.
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