Nadayu targets RM400m sales revenue for 2012

KUALA LUMPUR June 19): Nadayu Properties Bhd is targeting sales revenue of RM400 million for the financial year ending Dec 31, although 33% of its prospective homebuyers have cancelled their purchases as a result of difficulties in getting a bank loan.

Speaking to the media after the company AGM, CEO Alex Cheang said that to date, the company has achieved RM280 million in unbilled sales.
He added that the company’s project in Bandar Sunway, Nadayu 28, which is set to launch in August, is expected to provide its sales revenue a major boost. The developer recorded RM176 million in sales revenue for FY11.

“As a general statement, what we are experiencing today is that assuming we sell three houses and the buyers pay deposits, at least one unit will be cancelled because of loan problems,” said Cheang when elaborating on the impact of the banks’ prudent lending measures.

“[Because of the tightening of loan regulations], buyers are unable to get sufficient margins or any margins from the banks. In certain cases, the cancellation rate could be 40%,” he added. Executive chairman Hamidon Abdullah, however, emphasised that the company is managing the issue well.

“We have enjoyed 50% in sales with bank financing locked in before the formal release of Nadayu 28. As for 10 shoplots [in Nadayu 28], we are proud to say that we have people on our registration list.” Hamidon said the company was still looking for land to acquire in the Klang Valley and Penang, but it was not in a hurry to do so as Nadayu Properties currently has a sizeable landbank.

Hamidon (left) and Cheang at the company AGM yesterday.

The medium-sized property developer has a total landbank of 868 acres (347.2ha) with a gross development value of RM5 billion. “With the total landbank we have, it will take us about eight to 10 years to develop. As of today, only 20% is under development,” said Cheang.

Nadayu Properties incurred a net loss of RM5.03 million for the first quarter ended March 31, attributed to the completion method of accounting adopted by the company. This method of accounting allows revenue to be recognised when significant risk and reward of ownership have been transferred to the property buyer.

“The current quarter’s results will show a significant net profit from the revenue recognised from both the Nadayu Melawati project and the Taman Nadayu 92 Kajang project,” said Cheang.

This story appeared in The Edge Financial Daily on June 19, 2012.