Asian Pac banks on property launches in Klang Valley and Johor to weather challenging FY16

KUALA LUMPUR (Sept 21): Asian Pac Holdings Bhd is banking on three product launches in the Klang Valley and Johor to ride out the challenging year ahead.

Acknowledging the soft property market, Asian Pac's managing director Datuk Mustapha Buang said the company is looking to launch its condominium project Damansara 8 @ Damansara Damai, a mixed-development project in Kepong and 30 units of shop offices in Phase 2 of Dataran Larkin in Johor, in financial year 2016 ending March 31, 2016 (FY16).

The company is also in the midst of finalising plans for its maiden township on 400 acres of land in Labu, which is projected to be launched in 2017.

"We are not as bullish as before," he told reporters, after the company's annual general meeting (AGM).

"We are cautiously moving forward. We should be able to maintain our performance this financial year, with the right products and right pricing," he added.

Damai 8, yet to be launched, carries a gross development value (GDV) of RM330 million.

The mixed development project, consisting of service apartments and shops in Kepong, has a GDV of about RM350 million.

Phase 1 and 2 of Dataran Larkin has a GDV of RM163 million, with Phase 2 carrying a GDV of RM53 million.

Mustapha said the launch of the shop offices in Larkin was held back from end of last year.

"The Johor property market is quite dampened," he said.

"Most of the first phase of Dataran Larkin is occupied, so business seems to be booming.

"So we are confident that with Phase 2, we should be able to get a good response," he added.

He also said buyers were looking for affordability of properties and the company is looking to reduce the size of its residential products to between 650 sq ft to 1,000 sq ft, in order to price it below RM400,000 per unit.

Asian Pac's executive director Raymond Yu said the company had to change its plans for its Kepong residential project, to accommodate the market sentiments.
"We scaled down the sizes of the apartments to make it smaller," he said.

"It is all about affordability, and we are adapting to the market requirements," he added.

Asian Pac slipped into the red in the first quarter ended June 30, 2015 (1QFY16), recording a net loss of RM6.93 million or 0.7 sen per share, compared to a net profit of RM3.97 million or 0.41 sen per share in the previous corresponding quarter, mainly due to decreased revenue from its property development division.

Revenue declined almost triplefold to RM21.07 million in 1QFY16, from RM61.78 million in the first quarter of financial year 2015 (1QFY15), due to lower revenue recognised from its property development projects KK Times Square, Dataran Larkin and Fortune Perdana @ Lakeside in Kepong, as well as higher operation and finance costs.

Mustapha said out of 631 units at KK Times Square, only 30 units are left unsold, while Dataran Larkin has 3 units unsold out of the total 79 units, due to administrative issues over requests to change the bumiputera lots to non-bumiputera lots.

He also said recurring income from the company's Imago Mall in Kota Kinabalu, Sabah; and car park operations, will bolster the company's financial performance in FY16.

The company is targetting a 30% contribution from recurring income and 70% contribution from its property development division to earnings.
He also said Asian Pac's unbilled sales stood at RM350 million, which will be delivered to the company by 2017.