PPB Group to launch Puteri Harbour in third quarter

KUALA LUMPUR: PPB Group Bhd’s mixed development in Puteri Harbour, Iskandar Johor with RM1.5 billion in gross development value is taking shape and expects to start contributing to the group’s earnings next year.

“We have almost completed our planning and the building plan is currently being considered by the authorities and we expect the approval to be obtained in the next couple of months,” said PBB managing director Lim Soon Huat.

The first phase of the project, consisting of two residential towers, is expected to be launched in the third quarter this year and completed in 2017.

Despite the cooling measures introduced by the federal and Johor governments, Lim is “confident that the property will receive strong interest from a wide range of buyers”.

“Location is quite important and I think what the investors will look at is really the future value creation of the property and we believe that our property will create good value whether for residents who are going to stay there or for investors who are going to acquire the properties,” Lim said.

The development is a joint venture between PPB, and its shareholder Kuok Brothers Sdn Bhd plus Khazanah Nasional Bhd.

PPB said its businesses “will continue to perform well in 2014” with expansion plans for its cinema, flour and bakery segments.

Golden Screen Cinemas Sdn Bhd (GSC), which operates PPB’s film exhibition and distribution business, will open five new cinemas this year throughout Peninsular Malaysia, adding 50 new screens to its current operations of 233.

GSC has plans to add 59 new screens next year and 18 in 2016.

PPB’s bakery segment sees an expansion of 60% and consumers can expect a new range of bread products by the second quarter of this year.

For its flour milling segment, PPB’s wholly-owned subsidiary Johor Bahru Flour Mill Sdn Bhd has plans to construct a new 500-tonne per day mill at its current premises in Pasir Gudang, Johor.

PPB’s units in Vietnam, too, are poised for expansion with a new 500-tonne per day flour mill in northern Vietnam to be completed by the last quarter of this year.

Commenting on the 32% fall in Wilmar International Ltd’s core net profit in the first quarter of financial year 2014, Lim said it was not a major concern although the company contributed a large bulk of PPB’s earnings.

“We treat Wilmar as our long-term investment and associate company. We are not concerned about the short-term impact of its profitability. This is only the first quarter’s results,” Lim said.

“We own 18.5% [stake] in Wilmar and that contributes to quite a portion of our profit but we will need to see Wilmar’s performance in the next three quarters.”

Lim is confident the property will receive strong interest from a wide range of buyers.

Lim said factors such as increase in electricity tariffs and the implementation of the goods and services tax may add to operating costs but believes that PPB “experienced enough to mitigate those risks”.

“I think it’s quite obvious with the development that the cost structure will definitely go up, but it’s how we manage the cost in this real business environment,” he said.

PPB’s share price has been climbing steadily since September last year from RM13 to RM16.48 yesterday, up nearly 28%.

This article first appeared in The Edge Financial Daily, on May 16, 2014.


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