Ivory sees five-fold rise in sales

KUALA LUMPUR (Sept 24): Ivory Properties Group Bhd expects new property sales to grow more than five-fold to RM500 million in the current year as the Penang-based developer rolls out more projects on the island.

Executive director and chief operating officer Murly Manokharan said Ivory had registered new property sales of RM250 million within the first eight months of the financial year ending Dec 31, 2012 (FY12). This compares to the developer’s RM90 million worth of new sales in 2011.

According to Murly, Ivory aims to achieve earnings per share of at least 10 sen every year, which is expected to maintain the company’s price-earnings ratio at about five times based on the stock’s current price.

Ivory shares closed half a sen lower at 50.5 sen last Friday. The stock has declined 15% this year.

“Our property prices are [in the] affordable range and driven by the increasing demand of late. Property sales are relatively good compared with the previous financial year,” Murly wrote in an email reply to The Edge Financial Daily.

He said Ivory had unbilled real estate sales of about RM220 million as at end-2011.

In Penang, he said the RM500 million new property sales target would be mainly derived from three projects with a combined gross development value (GDV) of RM2.49 billion.

The list comprises The Latitude, with a GDV of RM476.5 million, in the Mount Erskine enclave; The Wave@Penang Times Square with a GDV of RM1.58 billion in Jalan Datuk Keramat; and the RM433.3 million City Residence & City Mall in Jalan Tanjung Tokong.

Other crucial projects expected to spur Ivory’s financials include the RM10 billion Penang World City (PWC), a joint venture undertaken with Dijaya Corp Bhd in Bayan Mutiara, according to Murly.

He said Ivory’s earnings are expected to improve from FY13 onwards in anticipation of the launch of PWC in the first quarter of next year.

“The management foresees the earnings of Ivory brewing to test another level ... from next year onwards given the massive and exclusive projects that are launched one after another. Therefore, barring any unforeseen circumstances, this will bode well for our future earnings as well as cash flow,” he said in his email.

Ivory’s latest financials have improved mainly due to fair value gains and negative goodwill from the acquisition of a subsidiary. In the first half (1H) of FY12 ended June 30, Ivory’s net profit more than doubled to RM30.89 million from RM14.71 million. Revenue fell 24% to RM71.3 million from RM93.63 million.

The company had cash of RM42.35 million as at June 30 against debt obligations of RM257.39 million, translating into a net debt of RM215.04 million. Its latest reported net assets per share stood at 81 sen.

The RM10 billion PWC project will be closely watched. In March last year, Ivory submitted an application to the Penang Development Corp to purchase and develop the 102.56-acre tract in Bayan Mutiara.

After a competitive bidding process, Ivory got the land for RM1.07 billion or RM240 per sq ft. It will be jointly developed with Dijaya into a residential and commercial enclave.

According to a filing with Bursa Malaysia, the proposed eight-year development is expected to start in 2H12. This is not the first collaboration between Ivory and Dijaya. The two companies already have a JV to undertake an estimated RM64 million residential project known as Aston Villa in Penang.

In the central region, Ivory and Dijaya have also formed a collaboration to undertake an estimated RM420 million mixed development in Tanjung Malim, Perak.

According to Ivory’s website, the project known as Ivory Eco Park includes residential, office and retail components near Proton City and the Behrang Railway Station.

Having done well in Penang and roped in a reputable JV partner in the form of Dijaya, it is therefore reasonable to ask if Ivory has plans to take its expertise to the Klang Valley.

Murly said developing properties in the Klang Valley will be a natural progression for Ivory, in line with the group’s plans to expand towards the central region.

“Undoubtedly, Ivory is cautiously scouting potential development land in mainland Penang and moving towards the central region of Malaysia as well,” he said

Murly declined to specify if Ivory is keen to participate in the development of the Employees Provident Fund’s (EPF) proposed Kwasa Damansara township on a 2,330-acre tract which forms a portion of the Rubber Research Institute Malaysia’s (RRIM) 3,155-acre enclave in Sungai Buloh.

It is worth noting that Dijaya has expressed its intention to develop properties within Kwasa Damansara as its Tropicana Golf & Country Resort in Petaling Jaya borders the southern portion of the RRIM land.

This article appeared in The Edge Financial Daily on Sept 24, 2012.