Titijaya to trim gearing ratio to 0.44 times post-IPO

KUALA LUMPUR: Property firm Titijaya Land Bhd, which is en route for listing on Bursa Malaysia on Nov 27, will pare down its gearing ratio to 0.44 times post-IPO from 0.7 times currently, said chief operating officer Lim Poh Yit.

Out of the RM122.56 million that Ttitijaya plans to raise from its listing, the Klang Valley developer will set aside RM15 million or 12.24% for repayment of bank borrowings.

At the prospectus launch yesterday, Lim said the industry average net gearing ratio is at about 0.5 times to 0.8 times, depending on the size of the company, adding that the company would be comfortable with a net gearing ratio of 0.44 times.

Its IPO comprises 81.7 million new shares, out of which 17 million shares are for the public, six million for eligible directors, employees and persons, 34 million shares for bumiputera investors approved by the Ministry of International Trade and Industry and 24.7 million shares for selected investors. The shares are priced at RM1.50 apiece.

Upon listing, the property firm will have an enlarged share capital of 340 million and an estimated market capitalisation of RM510 million. Titijaya has set a dividend payout ratio of 30% of its net profit.

Its total unbilled sales as at June 30 was RM500 million, said Lim. The group has completed some 3,000 properties, with a total gross development value (GDV) of about RM1.14 billion to date, including E-Tiara Serviced Apartments, Klang Sentral Commercial Centre, Mutiara Point Business Park (Phase 1), First Subang and One SoHo.

“Our plan for next year is to launch a total GDV of about RM630 million worth of projects in first half of 2014.”

Titijaya is expected to launch H2O Residences in Ara Damansara, with a GDV of RM572 million. It has also planned to launch the 14.72-acre (5.9ha) Embun @ Kemensah after H20. The Kemensah project has a GDV of RM214 million.

Executive director Charmaine Lim Puay Fung said, “At this moment, there’s no plan to expand to Iskandar. Currently we are very focused in most of the prime locations in the Klang Valley and we have seven projects here.”

“Coming up, we have projects such as Ara Damansara (H2O Residences) and Kemensah (Embun @ Kemensah), these are all in Klang Valley,” she said.

As for its property investment, COO Lim said, “Investment is not our core business. Based on our segmental results for 2013 financial year, rental income was less than 1%. Almost 99% of our income derived from property development [sales].”

According to its prospectus, the company’s three major revenue contributors are: the sale of development properties, the sale of completed properties and others, which contributed 97.8%, 1.64% and 0.58% respectively to its revenue for the financial year ended June 2013 (FY13).

He added, “We are very focused, our core business is still in property development.”

The property firm has registered a net profit of RM52.2 million for FY13, an increase of 52.9% year-on-year from RM34.1 million. Revenue came in at RM193.8 million from RM118.3 million a year earlier. Gross earnings per share has increased to 28 sen from 17 sen a year ago.

This article first appeared in The Edge Financial Daily, on November 12, 2013.