YNH targets RM1b property sales in FY12

KUALA LUMPUR: YNH Property Bhd foresees flat property sales growth in the current fiscal year in the absence of new launches during the period.

Head of corporate services Daniel Chan said the developer expects to sell about RM1 billion worth of properties from existing projects for its FY12 ending Dec 31, which is almost similar to what it achieved a year ago.

“Sales are there and we will see profit in the next four to five years. However, the biggest catalyst is the RM2.1 billion Menara YNH in Jalan Sultan Ismail, Kuala Lumpur.

Chan: If we can sell the tower en bloc, our sales will jump.

“If we can sell the tower en bloc, our sales will jump,” Chan told The Edge Financial Daily in a recent interview.

YNH’s existing mixed developments include the RM600 million Fraser Residence off Jalan Sultan Ismail and Jalan Ampang, and the RM1 billion Kiara 163 in Mont’Kiara. The developer is also undertaking residential and commercial projects within some 1,000 acres (400ha) in Manjung, Perak.

YNH launched around RM5 billion worth of properties in FY11 and raked in RM1 billion in sales during the year. The company sold RM450 million worth of properties in Fraser Residence and raked in RM300 million from Kiara 163, said Chan. In Manjung, he said YNH had secured sales of about RM250 million.

While YNH has not lined up any launches for FY12, Chan said the company intends to unveil its mixed development on a 95-acre tract in Genting Highlands next year. Besides the commercial and retail portions, the estimated RM3 billion project will include condominiums and bungalows.

Menara YNH will be closely watched as this development is seen as a major catalyst for YNH’s bottom line growth. The project has been delayed several times since 2006, as deals by two prospective buyers were terminated.

According to Chan, the developer which plans to sell Menara YNH en bloc, is talking to potential local and foreign buyers to acquire the commercial tower. He declined to specify the buyers, only indicating that they included foreign businessmen with deep pockets.

“These foreign tycoons are major real estate investors,” Chan said. He indicated that Menara YNH, by virtue of its strategic location, had attracted market interest and that YNH is not in a rush to sell the property as it hopes to secure the highest price.

“We will consider if the price is good,” Chan said, without specifying the timeframe when the deal would be finalised.

YNH had originally tied up with Singapore property giant CapitaLand Ltd on the project. The two companies signed an MoU in December 2006 to jointly develop Menara YNH on a 60:40 basis. Construction was originally slated to begin in mid-2007 with completion by end-2011. But in June 2007, the MoU was terminated.

In January 2008, YNH announced that it would sell half of the Menara YNH project to Kuwait Finance House (KFH) for RM920 million. The sale involved an area of 750,000 sq ft at RM1,230 psf, which at that time set a new high as it was about 10% higher than the record price commanded by the 36-storey Glomac Tower nearby.

KFH was supposed to take up half the building with the rest to be sold to other buyers. YNH was to rake in RM1.84 billion in total proceeds from selling the entire project. But the KFH sale fell through due to the global financial crisis. In December 2009, KFH informed YNH that it would not proceed with the formalisation of the sale and purchase agreement.

YNH’s net profit for the nine months ended Sept 30 fell 14% to RM40.22 million from RM46.55 million a year earlier while revenue dropped 26% to RM158.02 million from RM213.97 million before. Its net profit was curbed by higher tax expenses, according to notes accompanying its latest financials.

As at Sept 30, YNH had cash of RM17.47 million versus debts of RM265.07 million, translating into a net debt of RM247.6 million or net gearing of 0.3 times.

Its latest reported net assets per share stood at RM1.92. YNH shares closed at RM1.85 last Friday.

YNH, listed on Bursa Malaysia in 2003 under its former name Yu Neh Huat Bhd, began as a plantation entity in 1982 before venturing into property development.

The group’s real estate business took off in 1987 within Perak’s Sitiawan, Manjung and Lumut corridor where the group’s flagship Bandar Manjung Point township sits.

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