Hua Yang proposes 1-for-3 bonus issue; 1QFY17 net profit down 20%

KUALA LUMPUR (July 21): Property developer Hua Yang Bhd, which saw its first-quarter net profit fall 20%, has proposed to undertake a one-for-three bonus issue to reward its shareholders and increase its capital base to better reflect its current scale of operations.

The proposed bonus issue entails the issuance of 88 million bonus shares on an entitlement date to be determined and announced later. In a filing with Bursa Malaysia yesterday, Hua Yang said the exercise will also potentially improve the liquidity and marketability of Hua Yang shares, and is expected to be completed in the second half of 2016.

“The proposed bonus issue shall be wholly capitalised from the company’s reserves,” it added.

“The board confirms that the company has adequate reserves available for capitalisation of the bonus shares, and such reserves are unimpaired by losses on a consolidated basis, based on the latest audited consolidated financial statements of the company for the financial year ended March 31, 2016 (FY16), and its latest unaudited quarterly results for the period ended June 30, 2016 (1QFY17).

In a separate filing, Hua Yang reported a 20% fall in net profit to RM23.91 million or 9.05 sen per share for 1QFY17, from RM29.89 million or 11.32 sen per share a year ago, due to lower sales achieved in the current quarter under review.

Revenue was also 10.2% lower at RM127.96 million for 1QFY17, from RM142.57 million for 1QFY16.

Hua Yang’s total unbilled sales stood at RM410.07 million as at June 30, 2016.

The company said the outlook for the property industry continues to be challenging, with tight liquidity and subdued consumer sentiments.

“Our performance continues to be impacted by the tight lending regime. Nevertheless, in view of the soft property market and persistently challenging operating landscape, we are looking forward to launching several product offerings in the affordable housing category within the current financial year ending March 31, 2017,” Hua Yang chief executive officer Ho Wen Yan said in a statement.

“These launches, including our inaugural property offerings in Penang, should augur well for the group’s performance in the foreseeable future,” he added.

Hua Yang is expected to launch new product offerings valued at RM721 million in gross development value in FY17. They include two serviced apartment developments, namely Meritus Residensi in Perai, Penang, and Astetica Residences in Mines South in Serdang, Selangor.

Hua Yang shares closed unchanged at RM1.78 yesterday, bringing a market capitalisation of RM469.92 million.

This article first appeared in The Edge Financial Daily, on July 21, 2016. Subscribe to The Edge Financial Daily here.

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