Malton order book with RM1.5b projects

SHAH ALAM: Malton Bhd shareholders approved a new recurrent related party transaction at an EGM yesterday, paving the way for the company to take on RM1.5 billion worth of construction works from property projects related to major shareholders Tan Sri Desmond Lim Siew Choon and his wife, Puan Sri Tan Kewi Yong.
"We were getting shareholders' approval for our group to get construction contracts from related parties because our executive chairman Lim, he's got some other companies that does property development. They also award construction contracts and Malton has a subsidiary that does construction work also. For us to get contracts from related companies, we need shareholders' approval," its corporate finance director Ng Chee Kiet (pix) told reporters after the EGM yesterday.
Lim holds a 35.34% stake in Malton.
He said the approval is valid until its next AGM, which will be held sometime in November. He noted that this is the first time the company has obtained approval for projects from related parties.
The company is currently in advanced stages of discussions for the RM1.5 billion worth of contracts, the bulk of which is from Phase 1 of the redevelopment of Damansara Town Centre, which will be demolished and redeveloped into a mixed development.
Phase 1 will take five to six years to complete. Malton expects to start demolition works this year, which will take 12 to 18 months, after which it will proceed to piling works.
"We are hoping to get the concession contracts," he said, adding that it expects to finalise and announce the value of the contracts within the next few weeks.
The RM1.5 billion, which it expects to secure this year, will more than double its construction orderbook from the current RM600 million to RM700 million.
Ng said over the next two to three years, the group's construction orderbook will be 50% external and 50% internal projects. Last year, the company said it will focus more on internal projects from its property development division. The ratio as of November last year was 60% external and 40% internal projects.
On its property development projects, Ng said it will launch serviced apartments in Phase 2 of its Bukit Jalil project, which is a joint venture with Ho Hup Construction Co. Bhd. It will also be launching projects in Pantai Dalam and Ukay Perdana this year.
The property development division currently contributes the bulk of the company's profits. Last year, about 70% of its profits were from property development and 30% from construction. Its unbilled sales stood at RM400 million as of December 2014.
"So far, all our projects reach 90% take-up rates. Overall, it is more than 90%. The last few launches were all 90% sold," said Ng.
He noted that while demand is still strong, it takes longer to sell its property products due to stringent loan requirements, which makes it difficult for buyers, especially first time buyers to secure financing.
Malton also has a RM40 million private placement to raise working capital funds for its projects. To date, it has issued RM20 million. On whether it will issue the remaining RM20 million, Ng said it would depend on timing.
"Since early this year, our share price also softened a bit. Now it's about 85 sen," he said.
Malton's shares closed 0.5 sen higher at 84.5 sen yesterday with a total of 307,600 shares traded.