HRC World to invest in Yong Tai’s Encore Melaka theatre, reports third consecutive loss-making quarter

KUALA LUMPUR (May 29): Nasdaq-listed HRC World Plc will become a strategic investor in property developer Yong Tai Bhd’s Encore Melaka theatre with the proposed acquisition of a significant stake in the developer’s subsidiary.

According to a statement by Yong Tai yesterday, its wholly-owned subsidiary PTS Impression Sdn Bhd (PTSI) has today entered into a Memorandum of Understanding (MoU) with HRC World’s subsidiary HRC Music Plc over the proposed investment by HRC World in PTSI.

In pursuant to the MoU, HRC Music will subscribe up to a 70% stake in PTSI — which is principally engaged in the development and operation of Encore Melaka theatre — at a subscription price to be determined later.    

Both parties have mutually agreed to negotiate in good faith the details terms and conditions of the proposal with intention to finalise and enter into the relevant definitive agreements within 60 days from the date of the MoU or such other longer period as the parties may mutually agree upon.

“Yong Tai sees the synergistic value from HRC World to jointly operate Encore Melaka theatre as HRC World manages well-known music-centric, themed food and beverage cafes across China and other parts of Asia that strategically promotes live music and bands,” said Yong Tai’s chief executive officer Datuk Wira Boo Kuang Loon.

“Their participation would definitely boost Encore Melaka theatre's profile across China and other parts of Asia,” he added.

Boo noted that the subscription price to be determined later will not be less than the book value of Encore Melaka theatre and it is an opportunity for the developer to unlock the value of its investment in this iconic theatre.

Over the longer term, Yong Tai being the master developer of Impression City development will benefit from the value created by Encore Melaka theatre’s collaboration with HRC World, said the company.

HRC World and its group of companies are principally involved in providing strategic restaurant management services for restaurant chains across China and other parts of Asia as well as audio-visual content development, management and consultancy services.

Encore Melaka is the first international standard indoor theatre in Malaysia with a 360-degree rotating auditorium with a total capacity of approximately 2,000 seats.  

It is a franchise and the 10th Impression Series and first outside of China, which is a hit among tourists.

The theatre is nestled within the Impression City development, a RM7 billion gross development value cultural tourism properties development in Melaka which will be developed in stages on a 138-acre parcel of land.

Separately, in a filing with Bursa Malaysia today, Yong Tai reported its third consecutive loss-making quarter of RM5.26 million or 1.08 sen per share for its third quarter ended March 31, 2019 (3QFY19) versus a net profit of RM2.84 million or 0.59 sen per share last year, dragged by lower earnings from its property investment segment.

This was despite seeing quarterly revenue rise by 18.39% to RM40.06 million from RM33.84 million in 3QFY18.

The property developer attributed the decline in earnings from its property investment segment to low ticket sales as a result of fewer tourist arrivals in Melaka during this non-holiday season, coupled with non-operating expenses such as depreciation and interest charges which are no longer capitalised post commencement of the operation of Encore Melaka.

The group recorded RM1.69 million Encore Melaka ticket revenue for 3QFY19.

For the cumulative nine months ended March 31, 2019 (9MFY19), Yong Tai’s net loss stood at RM16.39 million or 3.38 sen per share from a net profit of RM10.06 million or 2.2 sen per share last year, while revenue was 11.21% lower at RM90.42 million, from RM101.83 million.

On prospects, with total unbilled sales of RM400 million, Yong Tai said the group will remain focused on its ongoing development projects, namely The Apple, Amber Cove, The Dawn and Impression U-Thant.

“All these projects are expected to begin contributing to the Group’s financial results in FY19,” said Yong Tai.

Shares of Yong Tai closed one sen or 3.17% higher at 32.5 sen yesterday, giving it a market capitalisation of RM173.62 million. Over the past year, the counter has fallen by as much as 77.27% from RM1.43.

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