UEM Sunrise lowers revenue growth target

KUALA LUMPUR: UEM Sunrise Bhd has set a lower revenue growth target of 20% for the current financial year ending Dec 31, said chairman Tan Sri Dr Ahmad Tajuddin Ali.

Last year, the company fell slightly short of its 30% revenue growth target after having decided to defer some of its property launches to adapt to the changing market conditions.

“We targeted last year for revenue growth of 30%. We made 26%. We were short by 4% but we have good reasons for that,” Ahmad Tajuddin said after the company’s annual general meeting yesterday.

“It was a conscious decision for us to delay some of the new launches [which were scheduled] at the end of last year because of the market forces that we were seeing with respect to the property boom.”

UEM Sunrise, whose flagship development is in Nusajaya within the Iskandar Malaysia region in Johor, has had to reconfigure some of its property launch dates to adapt to the new measures introduced by the government.

Under Budget 2014, the federal government raised the real property gains tax to 30% for properties purchased and disposed of within three years, and also removed the developer interest bearing scheme.

Meanwhile, Johor also heeded the federal government’s call by raising the minimum value of properties that foreigners could buy to RM1 million from RM500,000 previously. The rule will come into effect on May 1. However, the Medini zone in Iskandar will be exempted from this ruling.

UEM Sunrise executive director Datuk Mohd Izzaddin Idris said the company is in talks with the Johor government to iron out complications arising from the minimum RM1 million purchase price for foreign buyers.

Mohd Izzaddin said: “As far as we are concerned, there have been no cancellations for our units … I think the problem is if you buy a property for RM500,000 and then you want to sell it. You can’t sell if the value has not appreciated to more than RM1 million if the next buyer is also a foreigner.

“There are some complications and we are trying to get some clarification from the state to make sure that these issues are addressed especially for projects which were launched before May 1,” he explained.

Ahmad Tajuddin (left) and Mohd Izzaddin at UEM Sunrise’s AGM yesterday. Last year the company targeted revenue growth of 30% but achieved 26%.

Ahmad Tajuddin (left) and Mohd Izzaddin at UEM Sunrise’s AGM yesterday. Last year the company targeted revenue growth of 30% but achieved 26%.

UEM Sunrise will be particularly cautious of its new launches in light of the new government regulations, but Mohd Izzaddin is convinced that there is demand for landed properties with the “right pricing” in Iskandar.

“We have an advantage in Nusajaya. We have a low cost entry to the landbank. Our developments have proximity to infrastructure that has been built by the government or by Iskandar investments,” he said.

He added that UEM Sunrise’s partnership with Malaysian Biotechnology Corp Sdn Bhd to build the country’s first biotech park, called Bio-XCell, will serve as a catalyst for its other developments.

The company obtained planning approval for the park last September and will launch the project in June.

UEM Sunrise’s unbilled revenue stands at RM3.4 billion and it will be focusing on delivering on projects to chalk up next year’s revenue and profits.

Mohd Izzaddin also said the company does not “want to do too much” abroad.

“The challenge is making sure that these [overseas] projects will contribute to the bottom line. For projects in Canada or Australia, you cannot recognise revenue until you complete. That’s half the problem. You have to fund it yourself until the end before you can recognise the revenue. You need to have a lot of stamina or fire power or financial capacity to pursue projects,” he said.

When asked about UEM Sunrise’s legal dispute with Bank Kerjasama Rakyat Malaysia Bhd over a piece of land located in the Kuala Lumpur city centre, Mohd Izzaddin said the case has been set for hearing in June. Nevertheless, both parties are continuously engaged in discussions to seek an amicable solution, he said.

On a separate issue, Ahmad Tajuddin confirmed that UEM Sunrise is “looking everywhere” for a new chief executive officer (CEO) to replace Datuk Wan Abdullah Wan Ibrahim who passed away in February this year.

“We are in the process of identifying the CEO and managing director of UEM Sunrise … A special committee has been set up by the board and it is in the process of identifying and interviewing prospective candidates.”

The “search committee” has been given a two-month deadline to provide the board with a list of suitable candidates and the company may possibly have a new leader by August.

Mohd Izzaddin, who has been holding the fort after the demise of Wan Abduallah, said there have been no disruptions to the company’s operations.


This article first appeared in The Edge Financial Daily, on April 25, 2014.