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clock 18-09-2017
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Non Chinese Investor Eyes Stake in Titijaya Land

Titijaya Land Sdn Bhd is in an advanced stage of negotiation with a few parties, the frontrunner being a large foreign property company, that are looking to buy a stake in the developer, according to sources.

The foreign party, which is not a China company, is interested in Titijaya because of its landbank in prime locations, particularly in the Klang Valley. The foreign party also views the current soft outlook of the Malaysian property environment as an opportune entry point.

"The majority of Titijaya's land bank is in the Klang Valley, with some in Penang and Sabah. They see these areas as good locations, and ‘safer' should they decide to explore maiden developments in Malaysia" said the source.

Titijaya has a total landbank of 432 acres accumulated over the last two decades, with a total gross development value (GDV) of RM8.6bil. It has unbilled sales of some RM500mil. Titijaya has a market capitalisation of RM599.6mil.

Titijaya has total assets of RM1.49bil versus total liabilities of RM810.68mil. This gives it a net asset value of RM1.65 as of June 30, 2017. The source added that most of the foreign developer's past projects were similar to Titijaya's in terms of pricing and offerings - medium-cost homes and in urban areas.

When contacted by StarBiz, Titijaya deputy group managing director Lim Poh Yit confirmed that the company was in discussions with several parties but he declined to elaborate.

"Yes, the interest is real. They like our projects and our track record. They are also confident in the Malaysian property market over the longer term" said Lim.

Titijaya has construction company China Railway Group Ltd (CREC) as its partner. Beijing-based CREC, one of the world's largest construction companies, owns CREC Development (M) Sdn Bhd (CRECD) which is working with Titijaya on two projects.

The first is a mixed project on a 6.06-acre site at the Embassy Row in Jalan Ampang, Kuala Lumpur. Named 3rdNvenue, it has an estimated gross development value of RM2.1bil.

Titijaya has formalised a collaboration with CRECD for a RM575mil property development project known as The Shore in Kota Kinabalu.

Both parties signed a memorandum of understanding, witnessed by Prime Minister Datuk Seri Najib Tun Razak, in Beijing.

Titijaya's founder and managing director Tan Sri Lim Soon Peng and family control the company with a stake of 59.06%. Other substantial shareholders include AIA Bhd with a 7.82% stake, Lembaga Tabung Haji with 4.26% and the Employees Provident Fund with 3.9%.

For the fourth quarter to June 30, 2017, Titijaya's net profit increased 14.13% to RM17.01mil on the back of a 14.47% rise in revenue to RM122.05mil. For its full year (FY) ended June 30, 2017, Titijaya delivered a 12.28% rise in net profit to RM76.74mil on the back of a 4.83% drop in revenue to RM380.75mil.

Titijaya has called for a renounceable rights issue of up to 614,999,899 new irredeemable convertible preference shares (ICPS) on the basis of three ICPS for every two existing ordinary shares held at an issue price of RM0.165 per ICPS.

The rights commenced trading on Sept 5, with the last day and time for acceptance, renunciation and payment on Sept 19. The company will raise between RM58.28mil to RM101.48mil depending on a minimum or maximum scenario. The funds are allocated for property development expenditure and repayment of borrowings.

AmInvestment Research analyst Azman Hussin has a net profit forecast for Titijaya of RM80.1mil and RM90.4mil for FY18 and FY19 respectively.

He said that management has lined up new launches with RM1.75bil worth of gross development value in FY18. These are made up of five new projects, namely The Shore @ Kota Kinabalu (mixed development), 3rdNvenue @ Jalan Ampang (mixed development), Riveria KL Sentral (mixed development), and Damansara West, Bukit Subang (township).

It has set a FY18 sales target of RM500mil.

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