Nicholas Mun
Many public listed developers with a series of singular projects are buffeted by the rise and fall of the world economy. In a good market, sales are brisk and analysts recommend their stocks. But when things take a turn for the worse, sales as well as interest in their stocks fall.
Now enter the township developers. Offering a variety of products that such developments inevitably do, such developers can shift their focus or alter their launch timetable to provide that which the market can accept at any given time, be it good or bad. In short, they have the ability to ride out the changing moods of the economy.
There is, however, another edge such developers have. Their usually generous landbanks offer them long-term viability in an increasingly competitive market. And in the case of Plenitude Bhd, its landbank and what?s taking place on it is what?s going to take it to the main board of the Kuala Lumpur Stock Exchange (KLSE). Despite having received the Securities Commission?s green light to do so on June 3 this year, Plenitude has kept its listing on hold until market conditions are more favourable.
?We are looking to issue the prospectus sometime at the end of this year and hope to be listed by early next year. While that may be the plan, the timing will ultimately depend on market conditions, ? said Plenitude financial controller Khoo Yek San.
Pending its debut on the main board of the KLSE, Plenitude is keeping busy with the launch and construction timetables of its ongoing property development projects that form the very basis of its listing ambitions.
Plenitude executive director Zukarnine Shah is convinced of the quality of Plenitude?s landbank and how it will help in its plans to be a major player in the industry.
?The quality is good, covering the northern, central and southern regions of the country. And in terms of quantity, we have sufficient to keep us busy for the next 10 years,? he said.
While Plenitude may have had the major geographical locations of the country covered, the projects undertaken by its three wholly-owned subsidiaries play specific roles in its listing exercise.
?Plenitude Holdings Sdn Bhd is the core vehicle for the listing exercise providing us with the requisite track record in the form of Taman Desa Tebrau in Johor Baru,? said Zukarnine.
Clearly its flagship development for now, Desa Tebrau with its sheer size of close to a 1,000 acres, a gross development value (GDV) of RM1.9 billion and a 15-year development plan provides the justification for making an offer of its shares to the public.
Launched in 1997, this township development, which is located off Jalan Kota Tinggi about 14km from JB city centre, offers approximately 8,300 properties, the majority of which are landed residential units. Plenitude Holdings has so far sold and completed with Certificates of Fitness for Occupation (CF) RM245 million worth of stock. Another RM18 million is awaiting the issuance of CF with an additional RM150 million under construction.
Padding up the company?s bottom line is Taman Putra Prima and Bandar Perdana developed by Plenitude?s other two subsidiaries, Sepang Permai Sdn Bhd and Sin Yik Development Sdn Bhd respectively.
Launched in Aug 1999, the 452-acre Taman Putra Prima located within the Multimedia Super Corridor about 7km from Putrajaya and Cyberjaya will swell the company?s coffers with a sales turnover of RM945 million from its total 519 units residential and commercial properties.
For now, the development, which will be completed in 10 years? time, has generated a GDV of RM88 million from its completed units while another 520 double-storey terrace houses and 16 shop-offices under construction will bring in approximately RM100 million.
Meanwhile, Bandar Perdana in Sungai Petani, Kedah, with a GDV of RM1.22 billion, will see 7,400 properties built on 1,046 acres completed in 2016. So far, 658 properties comprising 429 double-storey terrace houses, 168 single-storey terrace houses and 61 shop-offices with a GDV of RM71 million have been completed.
Aside from its sheer size, Bandar Perdana, which was launched in April 1997 also stands out as it will reap the benefits of being part of the Muda Valley growth triangle. Comprising Sungai Petani and Kulim in Kedah and Butterworth in Penang, this area, which is currently one of the country?s most vibrant growth centres is set to become the north?s Klang Valley in the next decade. In fact plans are afoot to grant Sungai Petani city status in the next couple of years.
These three projects have ensured Plenitude a healthy profit even in the run-up to its approval for listing. For instance, in 1997 Plenitude Holdings made a profit of RM4.8 million. In 2000, the company raked in RM10.4 million and in 2001 the figure rose to RM13 million.
Freed to a large extent from concerns of maintaining a healthy bottom line, Plenitude has begun expanding its horizons by moving its focus to acquiring more landbank and business opportunities. This led it to acquire the 200-room Tanjung Bungah Beach Hotel in Penang for RM19.1 million in 2001. The hotel, which was purchased by Sin Yik Development Sdn Bhd began operations a year ago and is by its own assessment a sound investment.
?We would like to achieve a return of 10 to 12 per cent but we have to be realistic about it. Presently we are getting a nett yield of seven per cent based on a 20 to 30 per cent occupancy on weekdays and 90 per cent over the weekends,? said Zukarnine.
?We believe in its potential and in fact are planning a re-launch early next year. To this end, we are currently carrying out upgrading and refurbishment works to the tune RM2.5 million,? added Khoo.
Aside from this move into the hospitality industry, Plenitude is poised to make its maiden foray into the high-end residential market with its acquisition of four parcels totaling 20.1 acres in Sri Hartamas, Kuala Lumpur from Sri Hartamas Bhd?s wholly-owned subsidiary, Mawar Tiara Sdn Bhd for RM30.1 million or RM32.62psf.
Acquired through its subsidiary Kiara Terraces Sdn Bhd in December last year, the deal has just been completed with the company being given vacant possession of the four parcels delivered free of encumbrances. This will put Plenitude in a strategic position to exploit the market for high-end housing, which it is confident of doing given the acquisition cost, which Zukarnine admits is well below current asking prices. He revealed that the development plan for the four parcels is expected to assume the mantle of the company?s signature project.
Given that current values in the area have been pegged from RM50psf to RM60psf based on location and terrain, Plenitude has got itself a good deal. In fact, two parcels along Jalan Segambut now up for sale by tender by exclusive marketing agent CH Williams Talhar & Wong Sdn Bhd are pegged at approximately RM55psf and RM66psf respectively.
With a gross development value exceeding RM100 million spread over a development time frame of three to four years, the parcels will comprise both landed and stratified units. According to Khoo, Plenitude is planning to develop 84-semi-detached houses, 800 condominiums and 20 bungalows.
?We have submitted an amended layout plan for approval and expect to launch sometime in the third quarter of next year. Given the market conditions, we will most likely proceed with the semi-dees first and not the condos,? she said.
Although pricing for the semi-dees has not been finalised, Khoo revealed that it would be something that would ?get the market talking?.
As its plans for the Sri Hartamas parcels and the Tanjung Bungah Beach Hotel fall into place, Plenitude is pressing ahead to further enhance its landbank.
Zukarnine explained that the company is trying to strike a balance between parcels where the potential for return is immediate - such as the Sri Hartamas parcels - and those which strengthen the bottom line in the long term. But ultimately, he makes it clear that Plenitude?s aim is to be a major player in the industry.
?In the larger scheme of things, we aspire to stand tall alongside the other big names in the industry. We want to be seen as a reliable, prudent and long-term player that gives buyers and shareholders a good return,? said Zukarnine.
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