Maiden property project to boost profits: Furniweb

PETALING JAYA: Furniweb Industrial Products Bhd, which announced its diversification into property development last year, sees a potential boost in profit of some RM60 million from its maiden project in Kuala Lumpur.
The group, whose shareholders approved its name change to PRG Holdings Bhd at an EGM yesterday, will officially launch its project named Picasso Residence on March 28. There will also be a soft launch on Feb 7.
Executive director Datuk Seri Yeoh Soo Ann said revenue from the project will be a lot more than the current manufacturing business but is likely to only start contributing at end-year.
"But profit from this project will be a lot more compared with the average of RM5 million to RM6 million per annum from the manufacturing business," he told reporters after the EGM yesterday.
He said the project is estimated to generate profit of some RM120 million depending on the confirmed selling price and market conditions. Of the RM120 million, the group's portion after tax is RM60 million, based on its 60% stake in the project.
Located on Jalan Jelatek, Kuala Lumpur, the high-end condominium has a gross development value of RM600 million and offers 472 units housed within two blocks on four acres. The project is a joint venture (JV) with Furniweb holding a 60% stake and will take four years to construct.
"Registration has been quite successful, response has been strong given current market condition. This also goes to show that although the market may be weak, there's also a gap where people are still willing to invest," said Yeoh.
"Market condition is not going to be rosy for this coming year but I think the strategy moving forward we've got to be very cautious, and we have to make sure that we select the property (project) that at the end of the day can add value," he added.
Moving forward, the group's prime strategy in growing its property development business is via JVs and Yeoh said it has received many enquiries of interest for JVs from various landowners, both within and outside the Klang Valley.
"Moving forward, we are very selective. Given the current market condition we are very mindful as well, cash is king so we don't want to simply go into projects that will put us at a disadvantage. Having said that, we are actively exploring. Hopefully in time to come we will have a few more projects. For now, too premature to talk about it," he said, adding that it will also be selective in land acquisitions.
Meanwhile, the group intends to continue its existing business. It is involved in manufacturing of accessories and bi-products for the furniture, textile, medical, automotive and food industries with operations in Malaysia and Vietnam.
"Furniweb's existing core business is based on the weaving technology which is very successful, well known and accepted and a lot of global OEMs buy from us. That will still be part and parcel of the business. Moving to property, the strategy is to have two pillars," said its chairman Datuk Lim Heen Peok.
"Existing business has got a very strong asset base. The balance sheet is very good. So look at it from that perspective. The property business comes in a cycle, the numbers are much bigger of course. But it is balanced out by very steady income from the existing business," said Lim.