UEM Sunrise to boost recurring income

CYBERJAYA: UEM Sunrise Bhd aims to raise its recurring income from the current 5% to 20%-25% of its total profits by 2016 to 2017 through organic growth.

According to its CEO, Datuk Wan Abdullah Wan Ibrahim, this is a new strategy the company is pursuing to increase its recurring income.

“As the property business is subject to boom and bust cycles, we need to have a good recurring income portfolio to weather the storms. We want to improve our portfolio of recurring income assets,” said Wan Abdullah at a media briefing after a familiarisation tour of the company yesterday.

He said UEM Sunrise will build assets such as shopping malls, industrial facilities and car parks as part of its strategy to increase income.

“We’re building two malls at the moment — the first is at Solaris Dutamas next to the Wilayah Mosque and the other is the Medini mall in Nusajaya, Johor.

“In a few years, we’ll be big retail mall owners. We’re not going to buy ready-built malls. We will develop them ourselves,” he said.

UEM Sunrise is also the developer of Symphony Hills in Cyberjaya, a landed strata residential development, which offers smart-home features and community connectivity through high-speed broadband via its “Connected Intelligent Community” concept.

It also plans to launch the Residensi 22 Mont’ Kiara, a twin tower condominium located in Kuala Lumpur, in 2014.

“We allocate in our strategic plan about RM250 million to RM300 million a year for land acquisitions. With the gearing that we have today, we have a lot of room for bigger acquisitions,” said Azhar Mokhtar, chief financial officer of UEM Sunrise.

UEM Sunrise’s current gearing ratio is 0.3 in comparison with the average industry ratio of about 0.7.  

“We have only utilised about RM600 million of the RM2 billion IMTN (Islamic Medium Term Notes) approved last December, and will have a gearing ratio of 0.44 after spending the RM2 billion,” said Wan Abdullah.   

He added that UEM Sunrise saw the southern region’s profit overtake the central region profits in 2012, amidst strong demand for properties in the Iskandar Malaysia region.

“All projects being launched in Johor today get snapped up very quickly — not just by UEM Sunrise but also by foreign developers. By 2014, we will see the southern region contributing to 65% of our profits, the central region 30% and the rest 5%.”

According to Wan Abdullah, more joint ventures will be announced by the company by year-end.

Commenting on its current project in Vancouver, Canada, he said the project has a GDV of close to RM1 billion, with about 95% of its units sold. Phase 1 is almost completed and Phase 2 is currently under construction.

“We think that there is enough justification to look at fresh land banks — we have a small team there and we might as well capitalise on this team that we have.

“We are looking to acquire a suitable piece of land [for development],” said Wan Abdullah, adding that further details will be announced after the deal has been signed.


This article first appeared in The Edge Financial Daily, on September 27, 2013.