UEM Land takes a new form

KUALA LUMPUR: UEM Land Holdings Bhd is rejuvenating itself into a different animal, as it gears up to expand into new markets.

The company has identified India, Vietnam and Myanmar as potential targets.

“We are likely to expand and not only in our current, but new geographical locations as well. We are very keen on Sabah and Sarawak, Southeast Asia and the Indian subcontinent,” said managing director and CEO Datuk Wan Abdullah Wan Ibrahim at a media briefing last week.

He said the company has had a number of meetings to study the feasibility of a regional expansion, and he expects a deal to be signed by the end of the year.

In Sabah and Sarawak, it is in advanced discussions with landowners.

He added that the preferred route for a regional expansion would be through an acquisition or joint venture. Once it has had time to gather market intelligence UEM Land would be able to grow independently.

The company’s developments are primarily focused in Johor and the Klang Valley, though it has a presence in Canada through its purchase of Sunrise Bhd.

Locally, the company is bidding for land in “strategic hot areas” where it may develop up-market residential or office buildings.  

Wan Abdullah said the company is more known for its township developments, but hopes to leverage on Sunrise to diversify into other segments.

The company expects to see a “tipping point” soon, where it hopes to access a wider market through several projects that are due to finish soon.

“In Nusajaya, Johor, a number of catalytic projects will come into completion towards the year-end, and once this happens we will see a new demand structure, we expect a bigger audience. Previously, we expected most of our international sales from Singapore but once we breach the tipping point, our audience will stretch throughout the globe,” said Wan Abdullah.

He added that a number of projects will be fully completed and operational by the year-end.

These include the Coastal Highway, the Legoland theme park, and the local campuses of the University of Southampton and Malborough College.

UEM Land expects property sales of RM3 billion this year from RM2.2 billion in 2011.

The latter surpassed the company’s targeted level of RM2 billion.

More than half or RM1.3 billion of last year’s sales were from developments outside Nusajaya, indicating the company’s efforts to diversify in terms of location and the positive impact of the Sunrise acquisition

“This shows how much we have progressed. In the past, we were criticised for having very lumpy revenue lines, which were highly dependent on sales of land in Nusajaya,” said Wan Abdullah.

It aims to launch projects with a total gross development value (GDV) of RM4.5 billion, of which 62% or RM2.8 billion will be derived from outside Nusajaya.
These include developments in Mont’Kiara and Cyberjaya. Unbilled sales stood at RM1.85 billion as at end-2011.

This amount will be progressively recognised over the next two years and will underpin the company’s earnings.

UEM Land expects revenue growth of 50% this year.

Revenue grew 261.5% to RM1.7 billion last year from RM469.7 million in 2010, while net profit increased 55.1% to RM301.7 million in 2011 from RM194.5 million in 2010.

The major projects which contributed to earnings last year were 28 Mont’Kiara, SiLC (Southern Industrial and Logistics Clusters), 11 Mont’Kiara and East Ledang.