This article first appeared in The Edge Malaysia Weekly on June 8, 2020 - June 14, 2020

TWO-and-a-half years after the Doh family emerged as a substantial shareholder, Perak-based poultry group DBE Gurney Resources Bhd is in the midst of transforming itself into a different animal.

DBE, which stands for Ding Brothers Enterprise, was founded by its former chairman Datuk Ding Chong Chow and his brother Ding Choon Yung in 1986. The Dings gradually exited DBE after the Doh family — who have a property development business and are well known among Sitiawan folk — took control of the company.

But since then, DBE has sold 51% of the poultry business back to the Dings after the Dohs spearheaded the group’s venture into real estate in early 2018.

According to DBE managing director and major shareholder Datuk Jimmy Doh Jee Ming, the group intends to become a pure property player specialising in affordable housing development.

“Affordable housing will be the key growth driver for DBE in terms of revenue. We want to build a company with strong fundamentals, and we are making homeownership affordable for all Malaysians,” he tells The Edge in an interview via video.

Doh recalls that his father, Datuk Doh Neng Chiong, ventured into affordable homes in 1989, building more than 400 houses, with prices starting at RM32,000, in Taman Mas in Sitiawan, Perak.

“We continued there after completing and delivering more homes, contributing to the growth of the region and the state. We are fortunate to have the experience and expertise of more than two decades in building residential, commercial units and townships. Nevertheless, our focus will be always on providing affordable homes,” he says.

Commenting on the impact of the Covid-19 pandemic on the property market, Doh says he is unfazed as the interest and appetite of first-time homebuyers remain strong.

“While other developers are trying to get someone to buy a second home for investment ... our target market is first-time house buyers. Interest rates are very low now. I don’t think serious buyers would want to wait too long. They are price-sensitive and they have a tight budget. Once they identify the right house at the right location, they will buy,” he explains.

He adds that the key thing for DBE is for its projects to remain truly affordable.

“If you view property as an investment, definitely the market sentiment is bad now, especially during the Covid-19 crisis. But for our target market, it is a different story. The banks and financial institutions, including the Public Sector Home Financing Board, are willing to provide 100% financing to buyers that meet the eligibility criteria,” he says.

On average, says Doh, DBE’s projects are 20% to 30% cheaper than other affordable housing developments.

“The problem about affordable housing is that many people think that in Perak, below RM300,000 is affordable. But our definition of affordable is below RM200,000. I believe 80% of the demand for affordable housing in Perak should be below RM200,000,” he stresses.

Massive GDV pipeline

For perspective, DBE currently has four projects — Taman Desa Harmoni, Pangsapuri Seri Iskandar, Taman Bemban Indah and Pengkalan Prisma — all in Perak.

Taman Desa Harmoni and Pangsapuri Seri Iskandar are fully sold and certificates of completion and compliance (CCC) will be issued this year.

Taman Bemban Indah is 28% sold and 44% completed, while Pengkalan Prisma is 42% sold and 35% completed. As at March 31, these two projects had a total remaining gross development value (GDV) of RM113 million.

Notably, DBE had in February announced the proposed acquisition of the entire equity interest of three companies involved in property development, construction and trading of building materials. It will acquire the companies from the Doh family for over RM800 million, paying about RM150 million in cash, while the remaining RM650 million will be satisfied via a share issuance at 75 sen apiece.

“Upon completion of the corporate exercises, my family and I will own about 72% of DBE. Subsequently, we plan to undertake a private placement and, theoretically, our shareholding will then be diluted,” says Doh, adding that his family will seek a waiver of having to make a general offer.

It is worth noting that Blossom Eastland Sdn Bhd, one of its acquisition targets, has two major township developments — Bandar Baru Setia Awan Perdana (launched in 2016) and Lagenda Teluk Intan (launched in 2018).

On top of that, Blossom Eastland also owns smaller affordable housing projects and vacant land parcels that have been earmarked for future development in Tronoh and Manjung (Setia Residence and Taman Mulia).

Doh says the acquisition of Blossom Eastland is set to be a game changer for DBE, as Bandar Baru Setia Awan Perdana and Lagenda Teluk Intan, as well as the other projects, have a remaining total GDV of RM2.4 billion.

“We are expecting strong financial fundamentals moving forward, with existing projects and future projects post-acquisitions. The total profit after tax of the target companies is about RM124 million for FY2019,” he says.

Focus on ensuring consistent growth

Doh says the acquisitions will build on DBE’s solid track record in the affordable housing industry.

“Moving into this will unquestionably boost the group’s earnings, especially having disposed of the loss-making poultry businesses,” he explains.

To recap, the disposal of a 51% interest in the poultry businesses was completed on Dec 31 last year. DBE has a put option to dispose of the remaining 49% for RM9.8 million within five years.

DBE intends to exercise the put option at a time when the board deems fit, Doh says, considering that the poultry segment has been recording losses for the past 10 years, except for a minimal profit in 2016.

DBE shares have not been on investors’ radar in the past few years due to the weak financial performance of its poultry businesses in the past decade. However, with its diversification into property development and divestment of stakes in the poultry businesses, the group returned to the black in the financial year ended Dec 31, 2019 (FY2019), registering a net profit of RM7.7 million.

DBE is also proposing a share consolidation exercise — consolidating 25 existing shares into one share — to enhance the company’s profile among investors.

Based on its closing price of three sen last Wednesday, the group’s market capitalisation stood at RM85 million.

Although there is a lot of uncertainty in the market, Doh says he will remain focused on ensuring consistent growth at DBE, be it revenue or profit.

“It is our job to convince the investors to invest in our company, and what better way to do it than showing strong growth on a year-to-year basis?”

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