New lease of life for Global Oriental

GLOBAL Oriental Bhd's recent announcement that it was developing 5.75 acres of prime land in Kuala Lumpur could give it a new lease of life as it is the property developer's first major project since it changed its name from Equine Capital Bhd late last year.

In a filing with Bursa Malaysia on May 3, the group said its wholly-owned unit, Pedoman Ikhtisas Sdn Bhd, had signed a joint development agreement (JDA) with Lembaga Getah Malaysia (LGM) to start a mixed-use development project with an estimated gross development value (GDV) of RM860 million. The project comprises a corporate tower, office tower, residential tower, town villas and car park lots.

LGM, the land's proprietor, will receive an entitlement of RM267.25 million consisting of RM20 million cash and a corporate tower valued at RM247.25 million.

Although Global Oriental did not specify the location, it is believed the two parcels earmarked for the development are in the Jalan Ampang and Ampang Hilir vicinity.

According to public records, the bigger parcel, measuring 5.36 acres, is located behind the Gleneagles Hospital and Medical Centre off Jalan Ampang. A smaller parcel, measuring 0.39 acres or 17,147 sq ft, is located in the upscale Ampang Hilir area, off Jalan U-Thant.

In 2007, the U-Thant parcel was purchased for RM9 million or RM525 psf by TA Properties Sdn Bhd, a wholly-owned subsidiary of TA Global Bhd, and subsequently disposed of.

Checks with the Land Office reveal that LGM is the new owner. Under the JDA, Global Oriental is set to receive the gross GDV, minus the land proprietor's entitlement of RM20 million.

Meanwhile, Global Oriental says it will be responsible for financing the development through internally-generated funds and/or bank borrowings.

The exact proportion of borrowings and funds to be raised will be determined at a later stage.

Previously, the developer had focused on projects in Selangor, especially the highly successful Equine Park development in Seri Kembangan and several developments in Batu Kawan, Penang.

Its more recent developments include da:men in USJ, Subang Jaya, which boasts a GDV of RM1 billion, and Springville Residence in Equine Park.

Since the name change, plus the appointment of the son of a prominent entertainment and gaming tycoon as an executive director, Global Oriental seems to be getting more visibility among investors.

When the company was known as Equine Capital, a majority stake was held by Datuk Patrick Lim Soo Kit, who was said to be close to former prime minister Tun Abdullah Ahmad Badawi.

He stepped down as chairman and executive director several months after Barisan Nasional lost Penang to the Pakatan Rakyat coalition in the 2008 general election.

His plans to redevelop the Penang Turf Club into the RM20 billion Penang Global City Centre was cancelled by the new state government and Lim started to pare his stake in the company.

From holding a 29% stake in 2008, Lim ceased to be a substantial shareholder by 2011.

In December 2012, 24-year-old Ta Wee Der, the son of Waz Lian Group owner Tan Sri Ta Kin Yan, was appointed an executive director of Global Oriental.

Despite the changes, the company has remained in the property sector.

For the fourth quarter ended Dec 31, 2012, the group recorded a 317% jump in net profit to RM10.41 million or 4.58 sen per share, from RM2.49 million a year earlier.

However, revenue fell 10.98% to RM66.99 million compared with RM75.27 million previously.

Its full-year earnings saw a 4% drop in revenue to RM194.81 million from RM203.09 million while net profit plunged 28.98% to RM17.55 million, compared with RM24.71 million a year ago.

Indera Muhibbah Sdn Bhd and Duta Kembang Sdn Bhd own majority stakes of 6.55% and 6.54% respectively in Global Oriental.

Executive director Othman Mohammad, Lee Kwee Siong and Baharum Harun, who collectively own Perharap Sdn Bhd, Temasya Permai Sdn Bhd, Insan Mayang Sdn Bhd and Duta Kembang, together hold an indirect 12.05% stake.

Global Oriental's share price has risen 16% since May 3, when it announced its latest development, before closing at 57 sen on May 9.

This story first appeared in The Edge weekly edition of May 13-19, 2013.

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