Titijaya plans RM2.5b project

Lim (right), with Titijaya Land Bhd executive director Charmaine Lim, said any future forays into the high-end market will be dependent on location and purchasing power of the target market.

KUALA LUMPUR: Titijaya Land Bhd, a property developer with a market capitalisation of RM948.6 million, plans to develop a mixed integrated project with a gross development value (GDV) of RM2.5 billion on a piece of land located in Jalan Eaton next year, said its chief operating officer Lim Poh Yit.

The move will mark Titijaya’s first foray into the high-end residential market in Kuala Lumpur.

Lim said the proposed project is pending confirmation of an award from the relevant authorities, which it hopes to receive by the third quarter of next year.

“This is an opportunity for the company to embark on another segment of the market. After we got listed [in November last year], the investing public expects us to grow and thus, we cannot limit our growth towards a certain range of products moving forward,” Lim told The Edge Financial Daily in an interview yesterday.

On Monday, Titijaya announced that its wholly-owned unit Titijaya Resources Sdn Bhd had entered into an agreement to raise its stake in Tenang Sempurna Sdn Bhd (TSSB) to 70% from 23.33% for RM70,000. TSSB on July 10, 2014 received a provisional award for a joint-development agreement on the said land.

Lim described the buy-in into TSSB as fair.

“The purchase consideration was at par value, so we think it has no risk for us to enter into that share purchase,” said Lim. “It’s a development on a joint-venture basis, which is in line with the group’s strategy to embark on more projects with lower capital outlay,” he said, declining to identify the landowner.

The RM2.5 billion project would become Titijaya’s single largest project to date, said Lim.

He said the proposed project will consist of serviced apartments, to be targeted at the mid- to high-end market segment, as well as a hotel.

“We are currently talking to [hotel] operators to manage the hotel,” Lim said.

Asked what star-rating will the hotel be, Lim declined to say except that it “will be complementary to the location of the land”.

“We have not determined specifically what kind of market [we are aiming for].

“[However,] these [hotel operators] will be able to add value to the overall development. We are talking to a few parties now,” he said, adding that he hopes to conclude talks soon.  

In a report yesterday, AmResearch Sdn Bhd said it expects the proposed development to bump up Titijaya’s GDV closer to RM10 billion from about RM7 billion currently.

“We leave our estimates unchanged for now pending a formal endorsement from the relevant authorities. The proposed development will likely be well received, given its strategic importance as one of the last few sizeable tracts of land remaining within Kuala Lumpur’s golden triangle,” the research firm added.

AmResearch is maintaining a “buy” call on Titijaya at RM2.62, with an unchanged fair value of RM3.30 per share.

“Any future forays into the high-end market will be dependent on the location and the purchasing power of the target market,” said Lim.

The group had earlier proposed to build a mixed development with an estimated GDV of RM2 billion on a 20.4-acre (8.25ha) leasehold land on Penang island, which will be launched in the second half of 2015. It also plans to jointly develop with Bina Puri Holdings Bhd a mixed development project located on a parcel of land owned by Syarikat Prasarana Negara Bhd in Brickfields, Kuala Lumpur, which has a GDV of RM1.3 billion.

Titijaya’s shares are trading above its initial public offering price of RM1.50, closing up 6.49% or 17 sen at RM2.79 yesterday. Year-to-date, the stock has climbed 87.2%.

This article first appeared in The Edge Financial Daily, on July 17, 2014.