PRG forays into affordable housing

KUALA LUMPUR (June 13): PRG Holdings Bhd, whose share price hit an all-time high of RM1.07 on June 7, is exploring joint venture (JV) opportunities with Syarikat Perumahan Negara Bhd (SPNB) on affordable housing projects nationwide with combined gross development value (GDV) of RM5 billion.

PRG today inked a memorandum of understanding (MoU) with SPNB's wholly-owned subsidiary SPNB Aspirasi Sdn Bhd together with project consultant Mimbar Nusantara Sdn Bhd to collaborate in the projects — where they will focus in Klang Valley, Johor, and possibly East Malaysia as well.

Under the MoU, PRG will be involved in the construction and development of the housing projects.

Mimba Nusantara — which has participated with several affordable housing projects with SPNB — will focus on project coordination and consultation, said PRG group managing director Datuk Lua Choon Hann.

"We have done a few feasibility studies on a few [of the SPNB] projects and we will conduct due diligence [on them]," Lua told the media after the signing ceremony here today.

"We have reached a consensus on the big picture, it is just a timing issue presently [before a more detailed announcement]," he added.

SPNB Aspirasi is a wholly-owned subsidiary of SPNB, which is in turn wholly owned by Ministry of Finance Inc. SPNB has a mandate to offer affordable homes, with programmes such as Rumah Mampu Milik and Program Mesra Rakyat under its helm.

The collaboration with SPNB, said Lua, is in line with PRG's strategy to venture more into affordable housing. The manufacturing company kick-started its diversification into property development and construction back in 2014 by building apartments such as Picasso Residences, which are catered more to the luxury segment.

"Today, we are getting closer to make it (the venture into affordable housing) happen. We are looking at GDV RM5 billion in total, which we need a little bit of time to digest. Going forward, affordable housing is our main focus," said Lua.

For its financial year ended Dec 31, 2016 (FY16), PRG saw its net profit declined 29.83% to RM4.26 million from RM6.08 million a year ago. Revenue, however, rose a marginal 2.12% to RM132.06 million, from RM129.32 million previously.

Similarly, its 1QFY17 saw net profit drop 43.28% year-on-year to RM891,000 from RM1.57 million. Its manufacturing business was the sole contributor to its net profit in the quarter — the property arm made losses of RM969,000 in the period.

Lua said PRG does not expect a strong financial result in the second quarter as well, and will only see a rebound in 2HFY17, when 50% net profit is expected to come from the property and construction business.

"At that time, we will see better results on the back of the property and construction business," Lua said. The uptick, he said, will be mainly contributed by sales from Picasso Residences.

The group also has a 650-unit apartment JV in Subang U5, Selangor. "For that (Subang U5), it is now going through the approval phases; hopefully late this year, if not early next year, we will start to launch that project as well," said Lua.

Shares of PRG hit its five-year high of RM1.07 on June 7, having traded around the 90 sen-range since January. Year to date, the counter has gained 48.65% from its six-month low of 74 sen.

As at noon market break, shares of PRG climbed 3.81% or 4 sen at RM1.09, giving it a market capitalisation of RM325.06 million. — theedgemarkets.com

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