Selangor Properties to see flat earnings growth in FY16

KUALA LUMPUR (Feb 25): Selangor Properties Bhd (Selangor Prop) expects the group's earnings growth to remain flat in its current financial year ending Oct 31, 2016 (FY16), as the group, which has not launched new products for some years — though it has a luxury condominium planned this year — continues to rely on its property investments as its major income stream for now.

The group owns Menara Millenium in Damansara, 16 shoplots in Plaza Batai, 49 units in SPB Tower, and half the equity interest of the Australia Claremont Mall.

In FY15, Selangor Prop recorded a total revenue of RM99.09 million, against RM100.99 million in FY14; the property investment segment contributed 44.24% of total FY15 revenue, followed by its Australian operation (41.97%), while its property development contributed a meagre 0.46%.

The group recorded a net profit of RM593.68 million compared to RM198.05 million in FY14, mainly due to a one-off gain from land disposal and foreign exchange (forex) gains.

However, Selangor Prop director of finance Lee Tart Choong said for FY16, the group would not be able to enjoy the forex gains that it did in FY15, unless the ringgit deteriorates further.

"You will see a drop in our income this year. [But] our core business should be what we achieved last year," Lee added.

Meanwhile, Selangor Prop will be launching its condominium project, the Aira Residence, at Jalan Batai, Damansara, which carries an estimated gross development value of RM800 million, in the second half of 2016.

Selangor Prop chief operating officer Chong Koon San said Aira is a high-end 18-storey condominium that will be located on a three-acre land on the highest point of Jalan Batai. Comprising 105 units, each unit will be sized over 4,000 sq ft.

Though he acknowledged that the property market is soft this year, Chong is confident the project can cater to a special niche market, as the group has received many inquiries on the project although it has not launch or promote it yet. 

"The interest generated shows there is still a demand," he told reporters during a media luncheon here yesterday.

The project would mark a come-back for Selangor Prop, since its last completed terrace housing development project Selayang Mulia in 2002. Selangor Prop is also the prime developer of Damansara Heights in the 1960s.

"Our brand is an old brand. We have a proven track record, but our brand is more associated with the older generation. Because we have not been doing much development or publicise ourselves in the last 10 to 20 years, I think the younger generation have somewhat less connection (with us).

"We are at least going to reposition our brands to have a better connection with them," Chong said, adding that this would be achieved by launching products that are well received.

Apart from Aira, the group will also be refurbishing its 30-year-old SPB Tower, which is expected to be completed in three and a half years. The group owns 49 units out of the tower's 64 units.

The group still have a total land bank of 200 acres, of which 30 acres are in Damansara. Chong said the land bank should last the company over 10 years, as the group plans to develop it a parcel at a time to ensure no oversupply problem.

"The company is conservative. Being conservative is that we don't have many projects in one go. Our philosophy is that we do one at a time and perfect it," Chong said.

Selangor Prop dipped 1 sen or 0.18% to close at RM5.45, valuing it at RM1.87 billion. — theedgemarkets.com

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