SERI KEMBANGAN: Country Heights Holdings Bhd ’s flagship Mines development is getting a new lease of life as Mines Wellness City, an RM11bil mixed use project anchored on a health and wellness theme.
The 120-acre development, to be built around the existing infrastructure in Mines, is an entry point project under the Economic Transformation Programme which aims to position Malaysia as a wellness landmark for the region.
This means it will enjoy tax breaks over a 10-year development period, according to group CEO Dianna Lee Cheng Wen. She is Country Heights founder Tan Sri Lee Kim Yew’s second daughter.
The launch of Mines Wellness City, expected either this month or in January, is the culmination of several years of work to rebrand the 1,000-acre Mines Resort City in what Lee calls the “second wave” for Mines.
“The first two products to be rolled out will be a retirement home and business suites,” she told StarBiz.
Two-thirds of Mines Wellness City’s 36 million sq ft is earmarked for residences. While the development order and building plans have been approved, Lee did not reveal the planned number of homes as the amount could change depending on market demand, she said.
Most of the land for Mines Wellness City is owned by Country Heights, although some parcels belong to Lee’s father.
A joint-venture agreementis in place between the elder Lee and Country Heights, with the tycoon as land owner and Country Heights as developer, for land that the listed firm does not hold directly.
Across Malaysia, Country Heights owns 6,000 acres of land in the Klang Valley, Jitra in Kedah, Pajam and Port Dickson in Negri Sembilan and Kuching, Sarawak.
Lee said the group has projects worth a gross development value of RM6bil in the pipeline between 2014 and 2019, involving 200 acres of its landbank.
The niche developer chalked up total property sales of RM220mil in the nine months to September, and is on track to meet its full-year target of RM336mil, Lee noted.
Its unbilled sales stood at RM170mil. For next year, Country Heights is looking to make RM400mil in sales.
Meanwhile, market talk has it that Country Heights’ Taiwanese shareholder, Chunghwa Picture Tubes Ltd, is close to disposing of its 13.93% stake, sparking rumours of a possible privatisation of Country Heights.
Taiwan-listed Chunghwa Picture Tubes manufactures cathode ray tubes for monitors and televisions. Its major shareholders are believed to be cashing out of their investments in Malaysia.
In June 2011, Chunghwa Picture Tubes’ Malaysian unit sold 88.5 acres of land in Subang Hi-Tech Industrial Park for RM385.5mil to the then-Dijaya Corp Bhd, on top of 12.9 acres in Kampar, Perak for RM5.6mil.
Chunghwa Picture Tubes was the first Taiwanese firm to set up shop in Subang Hi-Tech Industrial Park, which was developed by Country Heights, Lee said. She declined to comment on the takeover rumours.
Country Heights is often cited as a privatisation target because of its perceived undervaluation.
Industry executives point out that the elder Lee may be keen to buyout Chunghwa Picture Tubes should it decide to exit, a move that would boost his holdings to 67.43% from 53.5% currently.
Back-of-the-envelope calculations show that a full takeover by the Country Heights founder would cost no less than RM128mil based on the firm’s last transacted share price of RM1 and market capitalisation of RM275.7mil.
Its book value per share of RM2.82 as at end-September is almost three times the value of its shares.
Much of the company’s landbank was acquired in the 1980s or 1990s and have not been revalued since, which means they could be worth a lot more.
In recent times, Country Heights has also enjoyed relatively high margins for its core property development arm due to inventory sales of bungalow land at Country Heights Damansara and previously completed projects.
The firm’s nine-month gross margins for property development stood at 43% versus 29% in the same period last year.
But Lee said those margins should normalise as inventory sales taper off, and given Country Heights’ anticipated ramp up in new sales.
The group is aiming for a 70:30 split between sales from its new launches and inventory compared with 50:50 in the past.