Ivory eyes maiden projects in KL and JB

PENANG-based Ivory Properties Group Bhd expects to finalise several land deals in Kuala Lumpur and Johor Baru by year-end, and is planning to undertake maiden development projects in the two property hot spots.

"We have enough landbank in Penang, so we are now looking at what's attractive in KL and JB. We hope to close the deals soon and make an announcement [with Bursa Malaysia] within the next few months," says Ivory chairman and CEO Datuk Low Eng Hock.

Low cites fast rising land cost in Penang as the reason the developer is seeking to widen its geographical markets. "Land prices in Penang are going up fast, so we have to start looking outside for opportunities. However, we have to keep in mind that land prices in KL and JB have increased as well"

In Penang, Ivory's Penang World City (PWC) project, which has a gross development value (GDV) of over RM10 billion, is gaining traction. Ivory holds 45% equity interest in PWC while Tropicana Corp Bhd owns the rest of the equity.

Ivory's share of PWC's GDV, of about RM5 billion, accounts for more than 70% of the total GDV of its ongoing and future projects of RM6.5 billion.

The developer has seen increasing interest in the PWC development, which spans 102 acres in Bayan Mutiara on Penang Island. Low says the 10.6-acre first phase of the project — with a GDV of RM763 million — saw pre-registration of 90% before its scheduled launch in October.

"This is a good start. We are planning for phase two, which has a GDV of RM1.3 billion and involves 13 acres. Hopefully, we can start launching phase two by the end of this year," he adds.

While it brands itself as a developer, Ivory has complete in-house capabilities, ranging from engineering, architecture consultancy and construction, to interior design. That the group is also the turnkey contractor for PWC will boost its construction earnings as well.

As for its maiden foray into KL and JB, Ivory plans to wrap up deals for a 10-acre tract in Sungai Besi, KL, and another 150-acre parcel in JB soon. It plans to develop these tracts under joint-venture arrangements with the respective landowners.

"I think there is no point to go to JB and commit ourselves to buy land at RM600 to RM800 psf. It is too expensive. We might as well develop the land under a JV, which will be a win-win situation for both parties. The JVs we have in Penang have enabled the landowners to double their investments," says Low.

The chairman, who has more than 25 years of experience in the property scene, is hoping that the group's maiden projects in KL and JB will make Ivory's brand known outside Penang.

Many developers are targeting mainland Penang as a landbanking destination. This is to ride on the upcoming Penang Second Bridge, which is expected to spur the development of areas around Batu Kawan, Nibong Tebal and South of Seberang Perai.

But Ivory is taking a more cautious approach in that location. "We have a development in Bukit Mertajam. We are also looking at land in the Batu Kawan area... hopefully [we can] find landowners who would want to collaborate with us. However, property prices on the mainland tend to appreciate slower compared with the island. Also, demand is mostly from the locals," says Low.

Apart from PWC, Ivory has its hands full with other ongoing projects on Penang Island.

The group is planning to kick off phases three, four and five of its Penang Times Square development by year-end. The new phases will consist of small office/home office (SoHo) units, a luxury shopping mall, a five-star hotel and a stand-alone cineplex. The entire Penang Times Square project has a GDV of RM1.58 billion.

Meanwhile, the development of its RM498 million high-rise condominiums in Tanjong Tokong will also be in full swing.

According to analysts, Ivory's valuations are undemanding at a price-to-book value of 0.8 times, given the current buoyant sentiments in the property sector. The counter has surged 35% year to date, to 65.5 sen on June 26.

RHB Research, which has a target price of 92 sen on Ivory, says the company needs a solid earnings track record and balance sheet strength that would give it a re-rating. Ivory's net gearing stood at 0.68 times as at March 31.

For FY2012 ended Dec 31, Ivory's net profit grew 30% y-o-y to RM31.98 million. However, net profit for the first quarter ended March 31 came in 40.2% lower at RM2.1 million compared with the previous corresponding period.

Low expects Ivory's net profit to pick up substantially from 2014 onwards. "For 2013, we hope to realise more profit from the PWC project.

"However, as the construction will only start in October, we may not be able to realise substantial profit from the project in 2013, even though the take-up rate is 90%. But we believe the profit will become more substantial from 2014 onwards."

This story first appeared in The Edge weekly edition of July 1-7, 2013.

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