E&O to focus on selling down inventory, as profits drop

KUALA LUMPUR: Eastern & Oriental Bhd expects the overall property market to remain soft, as the developer posted a 30% drop in earnings for the third quarter ended Dec 31.

“Nevertheless, we are encouraged by the recent sale of properties especially in our Penang projects,” it said in a filing with Bursa Malaysia on Tuesday.

“The buyers are mainly locals signifying there is still significant interest in high end properties at the right price in the right location,” it added.

E&O posted a net profit of RM21.98mil during three months under review compared with RM31.07mil achieved a year earlier, despite a 36% jump in revenue to RM331.9mil.

Property development contributed close to 90% of the group’s revenue.

“For the remainder of current financial year ending March 31, 2018 (FY18) and for the next financial year we continue to focus selling down our inventory with more innovative pricing packages,” it said.

The company said despite the stronger than expected economic growth, hikes in interest rates will further burden purchasers.

Bank Negara, last month, raised the overnight policy rate by 25 basis points to 3.25% on favourable economic growth outlook. The central bank will release the fourth quarter gross domestic product (GDP) on Wednesday.

Meanwhile, the market will be looking at the health of the property sector following recent cooling measures taken by Bank Negara.

For E&O, there are growth opportunities in the right segment of the market.

“The overall muted market requires a vigilant stance as we leverage on pockets of opportunities across the region,” E&O managing director Kok Tuck Cheong said in a press release.

Moving forward, Kok said E&O is maintaining its focus and resources on completing the reclamation of Seri Tanjung Pinang Phase 2 which is targeted for the second half of 2018.

Most recently, land titles for areas reclaimed above 2 metres chart datum (CD) have been obtained from the relevant authorities. Concurrently, more detailed design work for STP2A based on the parameters of the broad conceptual masterplan, have commenced and are at the initial stages.

Kok said that the next 12-18 months will see the Group mobilising sales of the final phase of Ariza Seafront Terraces at Seri Tanjung Pinang Phase 1 as well as targeting to launch the first properties in STP2A, the second phase of Avira Garden Terraces in Medini Iskandar and an estimated RM880mil worth of service apartments at the intersection of Jalan Conlay and Jalan Kia Peng.