MPCorp sees Iskandar project as key to turnaround

KUALA LUMPUR (Dec 17): Malaysia Pacific Corp Bhd (MPCorp) expects its upcoming residential project within Taman Nusa Damai in Iskandar Malaysia, Johor, which has a gross development value of RM204 million, to help pull it out of its loss-making position.

MPCorp is developing the project jointly with Bina Puri Holdings Bhd.

Its chief executive officer (CEO) and executive director Charles Ch’ng Soon Sen said the proposed development is slated to commence in two years, and will be a key project in improving the group’s business.

On May 26, MPCorp announced that it had signed a joint agreement with Bina Puri for the development of residential houses on a 24.41-acre (9.88ha) piece of land in Iskandar Malaysia.

Still, Charles said, the group’s turnaround will not happen overnight.

“We have done our best to change. We have [appointed] new board members, confirmed projects, a new management ... The company is changing, but we cannot turn around in one day,” he told The Edge Financial Daily after the group’s annual general meeting (AGM) yesterday, which lasted about three hours.

Charles attributed the management’s failure to turn around the group quickly to external factors such as the slowing Johor property market and depreciation of the ringgit, which had affected negotiations with potential partners.

He said the management is prepared to settle the group’s “historic” issues, some of which remain unresolved, or else MPCorp minority shareholders will have no confidence to vote in favour of any future scheme it may propose.

Earlier during the AGM, minority shareholders had raised concerns over the group’s move to re-elect Charles as a director, the payment of directors’ fees for the financial year ended June 30, 2015 (FY15), including that of the Ch’ng family, the additional time needed by its special auditor to complete the draft special audit report, its future direction and the amount owed to creditor AmanahRaya Development Sdn Bhd totalling RM115 million.

Nevertheless, all resolutions proposed were passed.

MPCorp’s main assets are the land in Iskandar Malaysia and the 22-storey Wisma MPL in Jalan Raja Chulan here. However, the group has seen a drop in contribution from the rental of its investment property due to a lower tenancy rate of 60% in the first financial quarter ended Sept 30, 2015 (1QFY16) from 70% a year ago, said Charles.

Meanwhile, MPCorp chief operating officer Jeffrey Chin said the group has not received any proposal from Superlon Holdings Bhd to be a shareholder of the group.

It was previously reported that MPCorp’s former CEO and controlling shareholder Datuk Bill Ch’ng Chong Poh, who is Charles’ father, had been in several discussions with possible white knights to rescue the group.

Charles said the white knights are not limited to local investors, adding that the weak ringgit against the US dollar has made local companies such as MPCorp attractive investment targets for foreign firms.

He added that management has continued to negotiate with potential investors to turn around the group’s business, with options including finding a new shareholder, disposing of assets and joint ventures.

Between FY10 and FY15, MPCorp made losses in four out of five years. It posted a smaller net loss of RM3.03 million in 1QFY16 from RM3.3 million a year ago, while revenue fell 29.18% to RM2.18 million from RM3.08 million in 1QFY15 due to lower contribution from the rental of its investment property.

In December last year, MPCorp’s external auditors expressed a disclaimer opinion in its audited financial statements for FY14, triggering the Practice Note 17 criteria.

Messrs BDO said it was unable to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.

As at Nov 2, Top Lander Offshore Inc, the private vehicle of the Ch’ng family, remained the largest shareholder of MPCorp with a 56.36% stake. The stock fell 7.89% or 1.5 sen to close at 17.5 sen yesterday, valuing it at RM50.34 million.

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This article first appeared in The Edge Financial Daily, on Dec 17, 2015. Subscribe to The Edge Financial Daily here.