EPF ups stake in Signature

When contacted, Signature

PETALING JAYA: The Employees Provident Fund (EPF) has emerged as a substantial shareholder in Signature International Bhd with a 5.07% stake or 11.61 million shares in the company.

According to a Bursa Malaysia filing, the biggest fund in the country has taken a substantial stake in the company that designs and manufactures kitchen systems on Oct 11. The following day, the EPF bought a further 80,000 shares in Signature.

The fund‘s entry into Signature comes as the company seeks to expand its business outside Malaysia, especially in UK.

Towards this end, Signature has been bidding for overseas jobs, and has put in a bid for phase two of the Battersea Power Station Restoration Project in London. The EPF holds a 20% interest in this project.

In 2012, the EPF took a stake in the redevelopment of Battersea Power Station, which is one of Malaysia’s biggest overseas property development projects. SP Setia Bhd holds 40% in the project and Sime Darby Bhd has 20% in the development on about 40 acres touted to fetch a gross development value of £8bil (RM43.3bil).

When contacted, Signature’s co-founder and group executive director Datuk Michael Chooi said the company was very pleasantly surprised with the EPF’s emergence as a substantial shareholder.

He confirmed that Signature had put in a bid for phase two of the Battersea project earlier this year.

“The size for phase two is relatively small, about RM30mil. The calls for tender interviews should be happening soon. We are, however, definitely preparing to bid for Battersea phase three which is a lot bigger – as there are more than 1,000 units to be constructed. We will tender for some RM100mil worth of jobs then,” said Chooi.

There are 254 apartments in phase two, while phase three will see the construction of some 1,300 apartments.

“We are serious about having a presence in the UK, and that is why we formed our UK company, Signature UK Pte Ltd, in May 2016,” said Chooi.

Some of the bigger Malaysian developers in the UK include SP Setia, Eco World International Bhd and Eastern & Oriental Bhd.

An analyst viewed positively the EPF’s entry into Signature because the EPF is a partner in some major property development projects.

The EPF is the land owner of Kwasa Damansara and the main shareholder of Malaysian Resources Corp Bhd.

The EPF has created Kwasa Land Sdn Bhd, the master developer of the massive Kwasa Damansara township sprawling over 2,330 acres in Sungai Buloh, of what was formerly the Rubber Research Institute Malaysia’s land.

Currently, Signature is the leader of premium kitchen systems in Malaysia, with an order book of some RM280mil. While the bulk of these are local orders, Signature has started making inroads into Vietnam and Indonesia over the last four years.

It has so far completed four projects in Vietnam, with an average value of US$500,000 (RM2.1mil) per project. While the value is still small, Chooi said it was possible that the overseas segment could contribute some 5% by its next financial year.

For its financial year ended June 30, the company made a net profit of RM20.31mil from RM47.79mil previously, while revenue increased to RM205.21mil from RM196.77mil.

The better results in the previous year was due to a one-off gain from the compulsory acquisition of land from the Selangor government.

At yesterday’s close of 86.5 sen, the stock was up 6.5 sen on a year-to-date basis and had a price earnings ratio of 9.89 times. The stock now gives a dividend yield of 2.33% and has a market capitalisation of RM197mil.

Signature derives 70% of its sales from projects and the remaining is made up of retail sales. Among its clients are the country’s first-tier developers.

Signature designs, produces, markets and distributes kitchen systems under its flagship brand Signature Kitchen and mass-market brand Kubiq. The company was established in 1994 and listed in 2008.

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