PROPERTY companies are announcing bigger earnings during the current financial reporting season, and analysts remain confident of a rosy outlook for some of the better-performing companies.
Based on the year-on-year and quarterly figures, developers of both residential and commercial properties are hauling in better earnings and sales figures.
Reflecting the strong commercial property market in the Klang Valley, companies with ongoing developments and assets in Kuala Lumpur and the suburban areas are among the star performers this time around.
As for the residential property sector, savvy developers with exciting residential developments catering to niche buyers are among the big winners.
Besides impressive portfolios of commercial assets, KLCC Property, YNH Property and SunCity also have residential projects in well sought-after locations, giving it another avenue to boost earnings.
One of the biggest owners of prime office space and other commercial assets in the Kuala Lumpur City Centre (KLCC) address is none other than KLCC Property, which has the much-touted world-class KLCC landmark under its belt.
Comprising the Suria KLCC retail mall, the Twin Towers office blocks, the Kuala Lumpur Convention Centre and Mandarin Oriental Hotel, KLCC Property is set to benefit substantially from the recovering commercial property market.
It is also undertaking a luxury condominium development, The Binjai condominiums (featuring 2,300 to 3,700 sq ft residences), that are fetching premium prices averaging RM1,200 per sq ft.
The company is embarking on a new development on Lot C of KLCC. The one-acre project will comprise a 60-storey tower featuring a six-storey retail podium that will add 180,000 sq ft retail space to Suria KLCC, a 20-storey office block and 22-storey serviced apartments.
The development is earmarked for completion by the third quarter of 2008.
Underpinned by the status of the KLCC as a world-class development, demand for prime office space in the Twin Towers continues to remain robust from multinational corporations (MNCs).
Compared with the average office rental rate of RM4.50 to RM5 per sq ft in the city’s Golden Triangle, MNCs such as Petronas, Exxon-Mobil and Tanjong are willing to pay up to RM10 per sq ft for the KLCC space.
With rental rates for commercial property, especially in the city centre, on the uptrend and expected to remain bullish, KLCC Property’s earnings outlook holds good upside potential.
According to a research filing by ECM Libra Securities, the expiry of the long-term leases for the KLCC office space around 2012 bodes well for KLCC Property, which net up to 60% of its earnings from rental income. “By then, we expect rental rates to have gone twice higher than the locked-in rates before, and a re-rating of the stock would be appropriate,” it said.
Analysts have estimated KLCC Property to turn in a 25% increase in net earnings to RM171.3mil for the financial year ending March 31.
For the first half year ended Sept 30, 2005, KLCC Property’s annualised net profit of RM163.8mil has exceeded consensus and this was attributed largely to the stellar performance of its retail and hotel operations.
Meanwhile, Sitiawan-based YNH Property, through two ongoing developments - Lot 163 Suites in Jalan Perak and Menara YNH along Jalan Sultan Ismail - is another strong player in the buoyant Kuala Lumpur commercial property front.
Lot 163 Suites comprise 26 levels of furnished service suites, two levels of retail podium and a 14-storey office tower with 35,400 sq ft office space, which is for en-bloc sale.
The RM880mil Menara YNH comprises a Grade A office block, two serviced apartment blocks and a 50,000 sq ft retail arcade.
The company is also making inroads into the Klang Valley residential sector with the planned launch of the RM140mil condominium development Radiant Kiara in June.
YNH made a net profit of RM55mil for the year ended Dec 31, 2005, up 43.5% over 2004. Profit margin was slightly stronger at 45.6% compared with 44.9% in 2004, due mainly to a higher commercial component.
Another property company that has recorded quite a stellar performance and is also building up a bigger exposure in the commercial property sector is SunCity.
The company’s ongoing expansion programme to add 700,000 sq ft of net lettable retail space to the 900,000 sq ft Sunway Pyramid shopping mall is set to spruce up earnings from its commercial division going forward.
The RM400mil expansion work is targeted for completion by April next year.
KLCCP : [Stock Watch] [News] SPSETIA-O : [Stock Watch] SPSETIA-W : [Stock Watch] YNHPROP : [Stock Watch] [News] SUNCITY : [Stock Watch] [News] SUNRISE : [Stock Watch] [News] MAHSING : [Stock Watch] [News]
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