Land & General sits on RM600m unbilled sales

KUALA LUMPUR: Land and General Bhd (L&G) sits on unbilled sales of about RM600 million that will last the company through the next 15 months, said its managing director Low Gay Teck.

The unbilled sales of RM600 million is contributed by its two projects, The Elements @ Ampang and Damansara Foresta, both of which contributed to the huge jump in its property division’s revenue from RM41.7 million in the second quarter of 2013 (2Q13) to RM134.6 million in 2Q14 ended Sept 30, 2013.

Low was speaking to the press after L&G’s extraordinary general meeting, which saw the shareholders approve its proposed acquisition of a 5.66 acre (2.29ha) tract off Jalan Ampang that adjoins its Elements project, for RM118.5 million cash.

L&G intends to fund its portion of the financial commitment of RM126.77 million through internally generated funds and/or external bank borrowings. Its gearing as at March 31, 2013 stood at 0.2 times.

The land purchase is for its serviced-apartment project, which has an estimated gross development value of RM788.7 million, based on the company’s preliminary feasibility studies. With a gross development cost of RM558.4 million, estimated profit stands at about RM230.3 million.

The serviced-apartment project is to be developed by a joint venture between L&G and Malaysia Land Properties Sdn Bhd (Mayland). The Elements project was also a JV between L&G and Mayland.

The company aims to launch the project at the end of the year, and will see four 46-storey towers built over two phases.

Low added that the company will be making some minor amendments to the existing plan, for which the previous land owner had already obtained a development order approval, and re-submit it to the local authorities.

On the outlook of the property market, L&G does not see a “glut” in residential properties.

“Whether there is a glut, we don’t think so; properties are always cyclical. Sales may slow down for a period, but the demand is still there,” said Low.

He opined that the slowdown in sales is mainly due to buyers not able to obtain loans, but he does not think this is going to be a perpetual issue.

As at Sept 30, 2013, the company had cash of RM293 million, an increase from RM172 million as at March 31, 2013.

L&G is primarily in the business of property investment and development. It is also engaged in the cultivation of rubber and oil palm, ownership of a school building complex, and provision of education services.

“Our current focus will be to look at development properties — land for development where we can acquire, build and sell,” said Low.

L&G’s share price had surged to a high of 49.5 sen on Aug 16, 2013 but fell to a low of 31 sen on Sept 2, 2013. Year to date, it has seen a return of about 25%, closing at 47 sen yesterday.

This article first appeared in The Edge Financial Daily, on February 12, 2014.


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