Monday 22 Apr 2024
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This article first appeared in The Edge Malaysia Weekly on February 5, 2024 - February 11, 2024

AFTER three rough years, things seem to be looking up for Berjaya Land Bhd (BLand) as both its property development and hospitality segments have bounced back from the Covid-19 pandemic. The diversified group is also gearing up to participate in public rail projects.

News that its newly formed 70%-owned unit Berjaya Rail Sdn Bhd (BRail) had teamed up with IJM Corp Bhd’s unit IJM Construction Sdn Bhd, Malaysian Resources Corp Bhd and national railway company Keretapi Tanah Melayu Bhd to bid for the Kuala Lumpur-Singapore high-speed rail (HSR) project sent BLand’s share price soaring to close at 46 sen on Jan 29 — the highest closing price since April 2021. The consortium led by BRail submitted the concept proposal on Jan 15 following the project’s request for information.

BLand group CEO Syed Ali Shahul Hameed tells The Edge that apart from the HSR project, BRail is looking to bid for other projects as well.

“There are many rail projects in the country. We can offer rail solutions and undertake maintenance services. We are open to all,” he says, adding that it does not discount potential public infrastructure projects such as the Mass Rapid Transit 3 (MRT3) and the light rail transit (LRT) jobs in Penang and Johor.

However, Syed Ali was tight-lipped when asked about the details of the bid for the HSR job.

While it is exploring new growth catalysts, BLand’s bread and butter remain its property and hospitality businesses.

Quick recovery

The group swung back into the black in the financial year ended June 30, 2023 (FY2023) after three consecutive years of losses, and is expecting better results in FY2024 as it ramps up the launch of residential projects with an estimated gross development value (GDV) of RM2.2 billion this year.

Syed Ali says that after the pandemic, the group’s recovery has been quick on higher revenue recorded by its property development and investment segment. Meanwhile, its hotels and resorts are enjoying higher average room and occupancy rates.

BLand ended FY2023 with a net profit of RM147.3 million, against a net loss of RM242.96 million in FY2022, RM247.64 million in FY2021 and RM36.84 million in FY2020. The group reported an improved net profit of RM36.87 million for its first financial quarter ended Sept 30, 2023 (1QFY2024), from RM8.45 million a year earlier, Bursa Malaysia filings show.

Syed Ali is confident of sustaining its profitability in the current financial year. “We expect the FY2024 results will be better than FY2023, driven by our property development and investment as well as our hotels and resorts business segments,” he says.

According to Syed Ali, the tourism sector has received a shot in the arm following the government’s decision to allow citizens of China and India up to 30 days visa-free entry into the country from Dec 1, 2023.

In addition, he sees construction activities carried out by its 90%-owned subsidiary Berjaya Construction Bhd giving the group’s revenue a boost this year. He says Berjaya Construction will not only carry out construction works for internal projects from Berjaya Group, but will start bidding for external projects such as the flood mitigation packages.

BLand has set a sales target of RM580 million for 2024, almost double that of 2023.

“We will be more active in property development this year. We have been holding back for three years due to the pandemic, even though we did not stop,” says Syed Ali.

Launch pipeline

BLand is aiming for four launches with a combined GDV of RM2.2 billion this year, with the dates set for after Chinese New Year.

Syed Ali says piling work is underway for the new development, Oaka Residences Bukit Jalil in Kuala Lumpur. With a GDV of RM355 million, it will offer 350 condominium units with built-ups ranging from 882 to 1,509 sq ft.

Other projects in the pipeline include Bayu Timur in Berjaya Park, Shah Alam, Selangor, which will feature 518 condominium units, and Berjaya affordable homes in Subang Heights, Selangor, which will comprise 402 apartments.

In Penang, the group is targeting to launch a luxury project with a GDV of more than RM860 million in George Town. It will feature 32 zero-lot bungalows and 207 courtyard villas.

“It is located at George Town’s most prestigious address. The design of the properties there will be the first of its kind and high-end,” says Syed Ali.

Named Jesselton Courtyard, prices will start from almost RM1,000 per sq ft.

Meanwhile, BLand will be handing over the keys to buyers of the RM784 million GDV Tropika Bukit Jalil in May this year. According to Syed Ali, all 868 apartments have been fully taken up.

BLand, through Berjaya Construction, will be involved in the construction of the RM595 million GDV Residensi Times Square 2 in KL, which will feature 629 serviced residences, by Berjaya Times Square Sdn Bhd.

“We are also the sales agent [for Residensi Times Square 2]. We have started selling the units online, while the show unit is being built,” he says.

Syed Ali believes that the group is not flooding the market with its residential offerings as it offers a diverse range of landed residential property as well as affordable high-rise homes, which are located in different areas.

“If you look at my project locations and products, they are different. Each project targets a different market segment. For example, the prices of the Bayu Timur condominium units in Berjaya Park, Shah Alam, start from RM534 per sq ft, which is affordable in that area. The units are located on 8.51 acres of land overlooking the Bukit Kemuning Golf & Country Resort and only 518 units will be offered,” he says.

“As for the Berjaya affordable homes in Subang Heights, prices are about RM250,000 per unit and they are located in a prime area. So far, we have already received 1,600 registrations for the 402 units.

“We categorise our property projects differently so that we can launch them simultaneously. We are not flooding the market. [For example,] Jesselton Courtyard is an upmarket project located in the Penang Turf Club area. Our target market is foreign buyers from Hong Kong, Taiwan and China, as well as locals.”

Syed Ali says while people talk about the residential property overhang, he believes demand depends on the property type and location. “I am confident that the property market is on an ascending path.”

He is positive on the economic conditions given the political stability in the country. “The government has implemented many initiatives to promote tourism. The Ministry of Housing and Local Government’s focus on the Madani inclusive housing concept also creates jobs.”

No decision to take BLand private

In December 2018, Berjaya Corp Bhd’s (BCorp) founder and adviser Tan Sri Vincent Tan Chee Yioun revealed that the group was weighing the possibility of delisting its 74.32%-owned subsidiary BLand from Bursa, and then floating its hotel assets on the Singapore Exchange. When asked, Syed Ali says no decision has been made yet.

BLand’s share price had surged 46% this year and 52% over the past year to close at 41 sen last Wednesday, giving the company a market capitalisation of RM2.01 billion. BLand shares are trading at a 49% discount to its net assets per share of 80 sen.

BLand operates primarily through four segments, namely its number forecast operations, motor vehicle dealership, hotels and resorts, and property investment and development.

The group’s biggest source of operating profit is its number forecast operations, via its 41.6% equity interest in associate Sports Toto Bhd. In 1QFY2024, the operator contributed RM104.76 million or 67% to BLand’s operating profit of RM156.9 million.

The hotels and resorts business segment’s operating profit came in at RM60.26 million — accounting for 38% of the group’s total operating profit — followed by the property development and investment segment at RM12.7 million, equivalent to 8% of its total operating profit, and the motor vehicle dealership, which accounted for 6% at RM9.92 million.

According to Syed Ali, the overall average room and occupancy rates reported by most of its hotels and resorts such as its 13 hotels in Iceland, the Four Seasons Hotel and Hotel Residences in Kyoto, Japan, and Berjaya Langkawi Resort in Kedah, which were hit hard during the pandemic, have returned to pre-pandemic levels. Today, the group owns and operates 34 hotels and resorts locally and abroad, including in the UK, Iceland, Seychelles, Sri Lanka, Vietnam, the Philippines and Japan.

“We are looking to grow our luxury brand. We want to go for high standard, luxury brands like the Four Seasons. There will be more Four Seasons in Japan and overseas in the pipeline,” he says without elaborating.

Following the success of its maiden development of a Four Seasons Hotel and Hotel Residences in Kyoto, Japan, BLand is developing a US$1.12 billion GDV Four Seasons Resort and Private Residences on a 100-acre tract in Okinawa. The group has completed earthworks and will begin construction works in 1Q2024, with the grand opening targeted for 2Q2027.

Berjaya Construction recently secured a loan of US$330 million from a consortium of Japanese financial institutions to fund the development of Four Seasons Okinawa.

Meanwhile, in response to the growing demand for private jet charters, Syed Ali says Asia Jet Sdn Bhd, which provides private jet charters, has placed an order for a Bombardier Global 6500 business jet for April 2025 delivery.

“The Global 6500 will accommodate 14 passengers for non-stop flights such as KL to London. This is in addition to our existing Global 5000,” he adds.

In June last year, Berjaya Air Sdn Bhd, the aviation arm of BLand, also placed an order for two ATR 72-600 turboprops from European turboprop manufacturer ATR, the first of which will be delivered by June 2025. When it enters service, it is expected to be the first ATR with an all-business-class configuration that can carry up to 28 passengers.

Berjaya Air currently operates a fleet of two turboprops, comprising an ATR 42-500 and the bigger ATR 72-500.

Both Berjaya Air and Asia Jet hold an air service permit (ASP) to operate non-scheduled, or charter, services. Syed Ali says that for now, Berjaya Air has no intention to convert its ASP into an air service licence to operate scheduled air services. 

 

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