Eastern & Oriental Bhd plans asset disposals to boost cash position


Eastern & Oriental Bhd plans asset disposals to boost cash position

KUALA LUMPUR, 26 August: Eastern & Oriental Bhd (E&O) is looking at opportunities to dispose of some of its landbank and non-core assets to improve its cash position, said its senior general manager of corporate investment and planning Yeonzon Yeow.

“We are reviewing our landbank and non-core assets to decide on what to dispose of, in order to improve our cash position and with that cash, reinvest into our major projects namely Seri Tanjung Pinang 2A (STP 2A) and to ensure the timely and compliant completion of the projects,” he told reporters after its AGM yesterday.

The group’s major landbank include 348 acres in Gertak Sanggul, 309.5 acres in Kemensah Heights and 135 acres in Elmina West. It is also reclaiming 166 acres in STP 2A. The entire STP 2 project will take up 760 acres.

The group’s cash and cash equivalent as at March 31, 2016 stood at RM247.29 million while net borrowing stood at RM1.27 billion. Yeow said its net gearing, at 0.78 times, is still manageable as it has unutilised banking facilities in excess of RM2 billion, earmarked to support its project developments and, largely, the reclamation of STP 2A.

Yeow said the land reclamation for STP 2A is already 10% done and will be completed by June 2018. It will take about 15 years to complete the development of STP 2A and its focus is to secure a strategic partner for STP 2.

Meanwhile, the group will intensify marketing efforts to sell existing inventory and launch RM1 billion worth of properties in FY17.

In FY16, it achieved a record in terms of new sales of RM1.1 billion and its unbilled sales, which stood at RM1.2 billion as at March 31, 2016, will be recognised over FY17 and FY18.

For its first quarter ended June 30, 2016, net profit fell 86.08% to RM3.24 million from RM23.26 million a year ago due to a minimal share of results of an associate at RM50,000 compared with RM20.72 million a year ago.

Revenue for the quarter more than doubled to RM163.31 million from RM68.89 million a year ago due to higher revenue recognition from ongoing projects.

A first and final single-tier dividend of 2 sen in respect of FY16 was approved by shareholders at the AGM yesterday.

The group’s gross margin declined to 39% in FY16 from 50% in FY15. Managing director Kok Tuck Cheong said there will be some margin compression in FY17 as they may need to sell new properties at lower than projected prices but otherwise, prices will remain at the current level, especially for landed properties.