Hope for Ho Hup now it will develop ‘Pavilion 2′ with Malton in Bukit Jalil

Mall set to be bigger than KL original, lauches due to kick off early next year.

KUALA LUMPUR: Ho Hup Construction Co Bhd is set to be profitable this year, reversing eight years of losses, in large part because it had struck a deal with Malton Bhd to co-develop the 24.28ha of land it owns in Bukit Jalil.

Malton, controlled by Datuk Desmond Lim Siew Choon, is said to be building a regional mall there dubbed “Pavilion 2” after the property tycoon’s flagship Pavilion KL on Jalan Bukit Bintang, along with other properties.

With 2 million sq ft of net lettable area (NLA), Pavilion 2 is even bigger than Pavilion KL’s 1.32 million sq ft and close to Mid Valley and the Gardens Mall’s combined 2.57 million sq ft.

Early artist’s impression of Ho Hup’s One Jalil project.

Malton is currently finalising its plans with City Hall for the 20.23ha portion of the land it is entitled to. The company may kick-start launches in the first quarter of next year, according to Ho Hup executive director Derek Wong.

The authorities have approved some nine to 10 million sq ft of NLA across the entire freehold Bukit Jalil development and a plot ratio of four, he told reporters following a shareholder’s meeting yesterday.

The development order for Ho Hup’s 4.05ha had been granted in February.

Wong said the response to initial launches of shop offices on its slice of land were well-received, with 90% sold so far, generating RM260mil in total sales.

Ho Hup’s 4.05ha is divided into Parcel A, a 2.38ha mixed project comprising offices, a hybrid mall and apartments above the mall, and Parcel B, which is purely residential. Parcel A had a gross development value (GDV) of close to RM400mil, Wong said. The potential value of Parcel B has not been finalised.

Parcel B is slated to be launched in the first quarter of next year. Although the details have yet to be concluded, the condominium would tentatively be 15 to 18 storeys high, with units ranging from 600 sq ft to 1,000 sq ft and eight to 10 units per floor, Wong said.

He added that Ho Hup did not plan to revalue its Bukit Jalil land, considered its most crucial asset, which was carried at a net book value of RM144.23mil. The land was acquired in 1995 at a cost of about RM30 per sq ft.

Early archived master plan of Ho Hup’s One Jalil project, now likely obsolete.

Meanwhile, Wong said the firm was on track to complete its regularisation exercise by September or October, and would thereafter seek to exit the PN17 category for financially distressed companies by mid-next year.

It had received the regulator’s nod for its restructuring on May 13 and can only apply to be uplifted from PN17 after showing two consecutive quarters of profit upon the completion of the regularisation. The regularisation exercise involves a capital reduction, a rights issue of loan stocks with free detachable warrants and a scheme to repay its creditors.

“Most of our creditors are agreeable to the debt restructuring. It’s a good deal because they don’t have to take a haircut and are getting either shares or cash.

“Ho Hup has been profitable for three quarters in a row now. All our business units are performing up to expectations,” Wong said.

Source The Star, June 28 2013

HwangDBS Vickers Research has re-rated the Malaysian property sector, calling it a “new dawn”

HwangDBS Vickers Research has re-rated the Malaysian property sector, calling it a “new dawn” on the back of upcoming mega initial public offerings, approval for new rail lines and the award of government land projects.

Beneficiaries include SP Setia Bhd, KLCC Real Estate Investment Trust (KLCC REIT), E&O Bhd and YTL Land & Development Bhd. Valuations are expected to be re-rated as sales and landbanking pick up.

Property analyst Yee Mei Hui said that it was business as usual now that the general election was over. There are likely to be no major changes in policies, as Federal and state governments for key markets in Kuala Lumpur, Selangor, Penang and Johor remain status quo. She said that launches should resume and sales should pick up as uncertainty dissipates.

“We upgrade E&O and YTL Land & Development to buy’ from hold’, and raise target prices across the board by 6% to 63%.

“For big caps, we like laggards like SP Setia, as its Battersea project in the United Kingdom is a game-changer to double earnings, while Malaysian Resources Corp Bhd stands to benefit from PJ Sentral, which could be the next KL Sentral,” Yee said.

“For exposure to Iskandar Malaysia, we see more value in small mid-caps like Crescendo Corp Bhd and Daiman Development Bhd versus UEM Land Holdings Bhd after the recent strong rally.”

She added that there would be potential competition from new bellweather stock IOI Properties Bhd and other Khazanah Nasional Bhd-led vehicles seeking listing, for instance, Iskandar Waterfront Holdings Sdn Bhd, Medini Iskandar or other potential themed attractions.

For the KLCC stapled security, Yee has factored in the potential injection of the Suria mall into the REIT, which will boost her sum of parts by 17%.

Yee said that the mega listings, which range from market capitalisations of RM9bil to RM13bil such as for KLCC REIT, Iskandar Waterfront and IOI Properties (which will be the largest developer by earnings), would help re-rate the sector.

“We are more positive on IOI Properties, given the dearth of sizeable entrepreneurial-driven developers with strong track records and earnings growth.

“The approval of the MRT 2 and 3 lines and the KL-Singapore high speed rail, along with the acceleration in awards of government redevelopment projects such as the Rubber Research Institute of Malaysia land in Sungai Buloh, the financial district of Tun Razak Exchange and Bandar Malaysia in Sungai Besi, should also boost interest in the sector,” noted Yee.

Source The star, May 11 2013

Confirmed: Bangkok’s Central Group will open mall in Shah Alam’s i-City

SHAH ALAM: Property developer I-Bhd and Thai mall specialist CPN Global Company Ltd have entered into a joint venture to build a 1.5 million sq ft mall in I-Bhd’s flagship development i-City with a gross development value of RM580mil.

I-Bhd would have a 40% stake via i-City Properties Sdn Bhd (ICP) in the joint venture while CPN would have the remainder stake via two locally incorporated companies – CPN Real Estate Sdn Bhd and CPN Malls Malaysia Sdn Bhd.

Construction for the mall will begin next year and is targeted for completion by the end of 2016.

“We are honoured to spur the economy with this agreement, more so given that this is the first fruits of foreign direct investments for the country after the May 5 general election,” founder and executive chairman of I-Bhd Tan Sri Lim Kim Hong said at the signing ceremony to mark the joint venture yesterday.

“At the end of the day, we envisage our shopping mall being a regional shopping paradise that is capable of boosting both the economic development of Shah Alam and Selangor as a whole,” Lim added.

CPN Real Estate, CPN Malls Malaysia and ICP would also enter into a shareholders agreement for the purpose of acquiring a part of the land in i-City to develop the mall.

The mall would be developed on a freehold plot of land measuring 11.12 acres with gross floor area of about 1.5 million sq ft and net leasable areas of 1 million sq ft.

The development marks CPN’s first foray into Malaysia.

“This important decision marks CPN’s first strategic move in Asean and our confidence in the Malaysian economy,” said CPN president and chief executive officer Kobchai Chirathivat.

CPN, according to a press statement, is the largest specialist developer and manager of large-format and integrated shopping centres established in June 1980 and listed since March 1, 1995 on the Stock Exchange of Thailand.

“We believe ICP’s expertise in construction management as well as local market understanding and strong government relations will greatly contribute to the success of this project. In the same way, CPN will contribute our expertise in retail property development to make this project a great success,” Chirathivat said.

The joint venture would be led by CPN while I-Bhd chief executive officer Datuk Eu Hong Chew said the company’s focus would be on developing the rest of i-City.

“We pass it to the experts as we want to focus on developing the rest of i-City. They will take the lead in design, building and managing the mall,” Eu said.

Meanwhile, I-Bhd posted a huge increase of RM4.92mil in net profit for the first quarter ended March 31 compared to RM819,000 a year ago on revenue which rose by 213.82% to RM27.14mil. It said in an announcement to Bursa Malaysia that the earnings were mainly due to profit recognition from ongoing projects of the property development division and the introduction of more theme park games under the leisure division.

Source The Star, May 14 2013, By DANIEL KHOO