IWCity shares hit limit-up after last week’s plunge

KUALA LUMPUR (May 16): Frenzy buying interest in Iskandar Waterfront City Bhd (IWCity) in the afternoon trading session pushed up its share price by 29.9%, or 49 sen, yesterday.

The spike in interest was fuelled by expectations of a possible reversal of the termination of the 60% stake sale in the Bandar Malaysia project.

The stock, which was battered down last week, hit limit-up half an hour before market close at RM2.13 yesterday.

Yesterday’s improved sentiment on IWCity also spilled over to Ekovest Bhd, which is also controlled by businessman Tan Sri Lim Kang Hoo. The stock gained 9.8%, or 12 sen, to RM1.34 with 79.5 million shares traded. Ekovest is the concessionaire for the Setiawangsa-Pantai Expressway (formerly known as DUKE Phase 3) that would be connected to Bandar Malaysia.

Shareholders of IWCity need to have the stomach for volatility. Last week, IWCity plunged to hit limit-down for two consecutive trading days, wiping out over RM1 billion in market capitalisation after it resumed trading last Monday, following news that TRX City Sdn Bhd had terminated the deal to sell a 60% equity stake in IWH-CREC Sdn Bhd.

IWCity succumbed to a heavy selldown because it has proposed a merger exercise with its sister company Iskandar Waterfront Holdings Sdn Bhd (IWH). IWH’s equity interest in Bandar Malaysia was perceived to be the prized asset in the entire merger exercise, given the sizeable prime land near Sungai Besi — less than 8km from the Petronas Twin Towers and Kuala Lumpur Sentral. Both IWCity and IWH are controlled by Lim.

Just when the investing fraternity had accepted the reality that IWH CREC was out of the picture as far as the Bandar Malaysia project is concerned, Prime Minister Datuk Seri Najib Razak’s meeting with Chinese President Xi Jinping and Premier Li Keqiang on the sidelines of the One Road One Belt Forum in Beijing over the weekend seemed to have given a new twist to the event.

An English daily, quoting a government source in Beijing, reported that Li had told Najib that China hopes the deal on Bandar Malaysia “stays unchanged”.

IWH holds a 60% stake in IWH CREC, while the balance 40% stake is held by state-owned China Railway Engineering Corp (M) Sdn Bhd (CREC). The joint venture signed a share sale agreement with TRX City on Dec 31, 2015, paying RM7.41 billion for the equity stake in Bandar Malaysia.

TRX City had said the agreement had lapsed because IWH-CREC “failed to meet the payment obligations”. However, IWH-CREC said the unilateral move by TRX City to call off the deal was “unacceptable” as the consortium had fulfilled its obligations and was keen to carry on as the master developer of Bandar Malaysia.

TRX City, a wholly-owned unit of the ministry of finance, had indeed refunded the deposit of RM741 million plus other payments to IWH-CREC last week. The refund signified the official termination of the stake sale.

Meanwhile, Najib also met Wanda Group’s owner Wang Jianlin, who expressed his interest in participating in the development of Bandar Malaysia. Wang is China’s richest man.

Najib told reporters that he expected Wanda to accept Malaysia’s invitation to develop Bandar Malaysia, expressing confidence that the leading Chinese property and entertainment group could “deliver something extraordinary, something so imaginative that we can create Bandar Malaysia as something that all Malaysians and the region can be proud of”.

This article first appeared in The Edge Financial Daily, on May 16, 2017.

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