THE three leading property companies under the Permodalan Nasional Bhd (PNB) stable – Island & Peninsular Bhd (I&P), Sime UEP Properties Bhd and Guthrie Property Development Holding Sdn Bhd – are set to make waves in the local property scene.
Industry observers are watching with keen interest the ongoing merger between I&P and Golden Hope Plantations Bhd, which would result in the emergence of a larger property player with sizeable land bank.
Sime UEP and Guthrie Property are not likely to be affected by the PNB-initiated corporate exercise, given that they are already successful property developers with strong track records.
The assets swap between I&P and Golden Hope will see I&P's 1,000ha landbank swell nine-fold when the merger is completed in May next year. Its shareholders' funds would increase to RM2.3bil from RM1.1bil currently and its paid-up capital will expand to RM933mil from RM346.8mil, a net increase of 200% and 300% respectively.
Analysts said having sizeable land bank, especially in strategic locations, was a definite advantage, this did not determine whether these entities would perform.
“More importantly, investors will opt for property stocks which are well managed and have strong cash flow. They must have the capacity to manage their enlarged entities and churn out saleable products,” an analyst with a local brokerage said.
“The liquidity of their shares is also important. If there is strong interest and the opportunity to make capital gains, investors will opt for these shares.”
The analyst said the ongoing consolidation and rationalisation exercise in the PNB companies might result in higher share placement to the public, which augured well for the investing public.
Sime UEP managing director Datuk Mohamed Said concurred that having an optimum size in terms of paid-up capital and landbank are important attributes for success for property developers.
“Developers need to have capacity to plan, develop and sell their properties in order to derive cash flow. Having access to strategic parcels of landbank definitely comes in handy, especially when they are former plantation land of freehold status,” he said.
Mohamed said Sime UEP was comfortable with its paid-up capital of RM404mil and cash pile of about RM152mil, including about RM100mil in the Housing Develop-ers Association (HDA) account.
With more than 5,000ha landbank in Klang Valley and Johor, which will keep it busy for the next 20 years, the company has the capacity to build and sell some 3,000 to 3,500 homes a year.
“It takes about three to five years to train competent staff and we have managed to optimise our staff strength at 250 and main contractors at 20,” Mohamed said in an interview.
He said although the company's free float was only about 5%, given the large institutional shareholding in Sime UEP, shareholders had been quite happy with the annual dividend of 27 sen per share paid out in the last four years, the highest among listed property companies.
Sime UEP, 30% controlled by PNB and 51% by Sime Darby, has built a niche as an integrated township developer with its award-winning 560ha Subang Jaya township.
Its ongoing projects are Putra Heights on 724ha, Bandar Bukit Raja (2,179ha) and Seafield Estate (161.2ha). A fund manager with a foreign brokerage said Sime UEP's strength lay in its strategic landbank and strong brand, Sime-UEP Homes.
He said being a subsidiary of Sime Darby group, which has some 32,000ha plantation land nationwide, Sime UEP has the opportunity to convert the land for property development.
PNB'S 73%-owned Kumpulan Guthrie and its subsidiaries, Guthrie Ropel Bhd and Highlands & Lowlands Bhd, are currently in the midst of their own internal rationalisation exercises.
Guthrie Property, which would assume the listed status of High & Low, is one of the bigger property players with a land bank of about 10,000ha.
Its maiden project is the 880ha Bukit Jelutong in Shah Alam with a total 8,015 units. Its future developments will be the 780ha Bukit Subang, 2,120ha Elmina and 920ha Lagong. The exercise is expected to result in a higher public shareholding in Guthrie, with the lowering of PNB's stake to 62.3%.