This article first appeared in The Edge Financial Daily on February 24, 2020
KUALA LUMPUR: Iconic Worldwide Bhd managing director Datuk Tan Kean Tet may be known as “Lucky Tan” in Penang, but to the 58-year-old former aquaculture man turned property developer, it takes more than just luck to build his businesses.
As cliché as it sounds, it is all about launching the right project at the right time in the right location.
That is why Iconic Worldwide is undertaking a mixed-development project — dubbed Iconic Point — at a freehold land in Simpang Ampat, Seberang Perai, Penang. With an estimated gross development value (GDV) of RM127.81 million, Iconic Point was fully sold at its two-day soft launch in Penang last September.
“Simpang Ampat is our hometown. We were born and raised there. It is not a big town, but it’s very dense with a good, mature population. Over the years, we couldn’t find any decent place to hang out because no developer has ever come out with a successful commercial development concept that is sizeable enough to attract anchor tenant,” Kean Tet told The Edge Financial Daily in an interview.
“But with Iconic Point, we are going to have the first Starbucks and McDonald’s in Simpang Ampat. As the name suggests, it is going to be a new landmark in Simpang Ampat, a dazzling lifestyle hub for the locals,” he said.
Sprawling across 8.7 acres (3.52ha), Iconic Point will feature 49 units of modern semi-detached and detached shop offices with individual shared lift. There will also be three drive-through food and beverage outlets with tenants such as Starbucks and McDonald’s.
Iconic Point is the first and presently only property project undertaken by Iconic Worldwide, which was known as Sanbumi Holdings Bhd as recently as August last year. Kean Tet surfaced as a new major shareholder of the company over a year ago.
“Since I emerged as the major shareholder of Sanbumi, now known as Iconic Worldwide, I have led the company to switch its focus from tourism to property development and hotel management. We have, over the last nine months, rationalised our businesses in the tourism industry and kept only those that are making profit or have the potential to have sustainable income,” he said.
Currently, Kean Tet controls 20.324% of Iconic Worldwide, of which 14.455% is direct. His daughter Katherine Tan Seok Ying and son James Tan Cho Chia also sit on the company’s board as executive directors.
With 10 years of experience in the property industry, Kean Tet is also the founder and chairman of Iconic Group, one of the top property firms in northern Malaysia.
The group has completed about RM600 million GDV worth of developments, while its ongoing projects have a total GDV of around RM255 million.
Some of the projects completed by Iconic Group include Icon City, Iconic Hotel, Iconic Skies and Iconic Vue.
Interestingly, Kean Tet ran his own aquaculture companies for over 20 years, before starting Iconic Group about a decade ago.
He decided to exit the aquaculture business and venture into property development because he thinks the latter is a more sustainable business for his children to take over in the future.
“The aquaculture business is very challenging, that’s why I sold it to my younger brother. Today, I am very committed to building the businesses of Iconic Worldwide. I want to grow it into a bigger company,” Kean Tet said.
A turnaround story
Seok Ying acknowledged that the locally listed Iconic Worldwide is relatively smaller than the privately owned Iconic Group, but steps have been taken to improve the earnings visibility of the listed vehicle.
“We are on track to register our first full-year profit for the financial year ending March 31, 2020 (FY20), making it the first profitable financial year since 2006 or in 14 years,” she said.
For perspective, Iconic Point is a 65:35 joint venture between Iconic Worldwide and Iconic Group. The project has commenced construction and it is expected to be completed in the fourth quarter of 2021.
In fact, profits generated by Iconic Point have already lifted Iconic Worldwide’s financial performance for FY20, and will continue to contribute positively to the company in FY21 and FY22.
Although Iconic Group is still in operation, Seok Ying said her family will be focusing more on Iconic Worldwide in the coming years, as future land acquisitions and new projects will be undertaken by the listed firm.
“We will not be injecting the whole Iconic Group into Iconic Worldwide. But, going forward, we might be injecting some parcels [of land] from the former into the latter,” she explained.
Iconic Group, Seok Ying said, still owns some plots of land in Langkawi, Kedah and Batu Ferringhi, Penang, which could be injected into Iconic Worldwide as the latter plans to build hotels and serviced apartments there within the next two years.
Additionally, Iconic Worldwide has a few parcels of undeveloped land in Melaka and Johor.
“We are also looking at a few new projects at the moment, two of which are the projects planned by the previous management and we are working towards making it more adaptable to the current market condition,” said Seok Ying.
Hotel management business
Iconic Worldwide is also in the hotel management business. On April 1 last year, the company signed a hotel management agreement with Iconic Group for the provision of services to Iconic Hotel.
The deal provides Iconic Worldwide with a new and recurring revenue stream.
Iconic Worldwide will continue to look for good locations for property development, possibly beyond Penang to places like Langkawi and Sabah, for hotel and serviced apartment projects to generate more recurring income for its hospitality segment.
“We can either expand via joint ventures with landowners or do an outright purchase of the land. Hotel management is another area we will be focusing on,” said Cho Chia.
Currently, the Tan family members collectively own more than 20% in Iconic Worldwide. Kean Tet, however, said it is his family’s intention to increase their shareholdings as they are confident in the company’s business potential.
Although Iconic Worldwide has only one major project and its market capitalisation is just about RM100 million, based on its share price of 31 sen last Friday, Kean Tet is not shy about his ambitious target of pushing that to RM500 million in the next three to five years.
“The market [capitalisation] and share price are not something that [are] under our control. However, something around RM500 million would be a nice number for us to set as a target. We will continue to work hard and deliver good earnings. We believe shareholders and investors will eventually realise our value and this will be reflected in our share price,” he added.