Tiger Synergy to launch Alam Impian in Shah Alam, Selangor, in early 2016

KUALA LUMPUR: Tiger Synergy Bhd which slipped into the red last financial year ended June 30, 2015 (FY15) due to administration costs and pending the launch of new projects, will launch three new projects with a combined gross development value (GDV) of RM500 million next year, to turn itself around and start gaining traction again.

Lee Chin: Once we achieve 40% of sales, we would have enough funds to complete the entire projects.”

The group aims to generate a gross profit of RM100 million in FY16 from a net loss of RM2.05 million in FY15.

Tiger Synergy managing director Shirley Tan Lee Chin said it will kick off its Alam Impian project in Shah Alam, Selangor, which has a GDV of RM300 million. The project features 132 semi-detached houses. “We have started earthworks on the site, and target to launch the project by early 2016,” Lee Chin told The Edge Financial Daily in an interview last week.

Lee Chin was appointed to her current position on Nov 25 last year, succeeding her brother Datuk Tan Wei Lian who has been redesignated as executive chairman.

“Despite the current slowdown in the property market, particularly in high-end products, we are still quite confident that response to Alam Impian will be good as it is strategically located,” she said.

Apart from Alam Impian, Tiger Synergy will be launching two condominium projects located in Gombak and Cheras, with a GDV of RM100 million each. “We are targeting to launch the two projects by the second quarter of 2016,” said Lee Chin.

She estimated that with about 40% of development costs, the three projects will garner a gross margin of some RM300 million over the three years of construction period.

“That is where our FY16 target of RM100 million gross profit comes from, provided that we manage to sell all the units to be launched,” she added. 

Nevertheless, Lee Chin noted that even in the case of the company not being able to achieve 100% sales within FY16, it is sufficient to finance the development by selling 40% of the three projects. “Once we achieve 40% of sales, we would have enough funds to complete the entire projects,” she said.

Tiger Synergy has another two property projects in Serdang and Seri Kembangan, which are relatively larger. “We will launch these two projects maybe by 2017, because they are quite huge with a collective GDV of RM1 billion.

“Therefore, all five projects have a combined GDV of RM1.5 billion, which is estimated to provide the group a gross profit of RM500 million over the next five years,” she said.

Meanwhile, the group has proposed to undertake a rights issue on the basis of two rights shares for one existing share, to raise up to RM191.47 million. It plans to use 84.46% of the proceeds to acquire land and for property development expenses.

Under the proposal, the rights issue also comes with two free warrants and one bonus share for every five subscribed rights shares. Notably the proposed corporate exercises also includes a par value reduction of Tiger Synergy share to eight sen, from 20 sen.

Commenting on the fund-raising exercises, Lee Chin said the group has the intention to acquire additional land bank in the Klang Valley going forward. “Of course, valuation is crucial, therefore we will try to identify cheaper lands. We foresee that in the near future of one or two years, there will be good land with attractive prices due to the economic slowdown now,” she noted.

Of the remaining proceeds, 10.45% is slated for working capital, 4.66% to repay borrowings, and 0.43% for estimated expenses in relation to the rights issue. Subsequent to the repayment of bank borrowings, Lee Chin said Tiger Synergy will have zero gearing.

As at June 30 this year, Tiger Synergy has cash and bank balances of RM1.48 million, on the top of fixed deposits with financial institutions of RM6.79 million. The group’s balance sheet also shows that its accumulated losses stood at RM39.38 million.

Tiger Synergy’s circular to shareholders dated Nov 4 mentioned that with the par value reduction, the group will be able to eliminate its existing accumulated losses.

Besides property development, Lee Chin said the group recently set up a RM2 million concrete batching plant in Shah Alam. The business is meant to complement its property development division.