TA Global defers Dutamas project again

KUALA LUMPUR (May 31): TA Global Bhd has once again deferred the launch of its Dutamas condominium development in Mont’Kiara here to the first quarter of next year (1Q17) from 4Q16, due to poor market conditions.

Sprawling 4.55 acres (1.84ha) of land in the exclusive and affluent residential enclave of Kenny Hills, Sri Hartamas and Mont’Kiara, the Dutamas project with a gross development value (GDV) of RM482 million has been in the group’s plans since 2011. It was originally scheduled to be launched in 4Q15.

TA Global executive director Kimmy Khoo said TA Global will, however, go ahead to launch its Ativo Suites, consisting of 668 units with a GDV of RM450 million, and its Little Bay Cove project in Sydney, Australia, with a GDV of A$160 million (RM472.87 million) this year.

She added that the timing of the launch of the Dutamas project will be dependent on market conditions, whose units are larger in size and higher in prices than the two-block Ativo Suites, its Damansara Avenue development.

“If the market is strong, we will be able to do it (launch in 4Q16). We are ready but it depends on the market because Ativo Suites are smaller; it is more affordable in terms of the price level,” Khoo told a press conference after the group’s annual general meeting (AGM) yesterday.

The built-up of the Dutamas units range from 1,652 sq ft to 6,500 sq ft for the penthouse unit, while 70% of the Ativo Suites units have a build-up of between 500 sq ft and 650 sq ft, and the remaining 30% units measure between 1,000 sq ft and 1,200 sq ft.

Khoo also said 83% of the Little Bay Cove project had been taken up to date. TA Global is expected to recognise A$138 million from the project on a progressive basis over 18 months starting 3Q16.

TA Global non-independent non-executive director Datuk Tan Kuay Fong said the bulk of the group’s revenue for FY16 will come from its Trump International Hotel and Tower project in Vancouver, Canada, which is targeted to open in August.

The group will keep three penthouses in the project for recurring income.

Trump International Hotel and Tower contributed RM46.4 million in profit, representing 57.4% of the group’s profit, in the 11-month period ended Dec 31, 2015 (FY15). The group had changed its financial year end from Jan 31 to Dec 31.

For FY15, TA Global recorded a net profit of RM43.62 million on revenue of RM534.95 million. The main contribution for the group came from hotel operations, property investments and property development outside of Malaysia.

Meanwhile, the group has also completed the refurbishment of its Movenpick Resort & Spa in Phuket to add in more rooms to the hotel. It also plans to develop a 20-acre land near the hotel.

On TA Enterprise Bhd’s stockbroking segment, Tan said the group is looking to open more branches in the future where the demand is.

The group opened two branches in Melaka and Penang last year, and a branch in Johor Bahru in April 2016.

“We will look to open more when there’s a need because the cost of opening a branch has dropped significantly. Last time, we had to spend more than RM1 million to open a branch, but now trading is mostly done through the Internet,” Tan said.

“In spite of the challenging environment, our return on equity (ROE) in our stockbroking firm is still decent, much better than some of the bigger firms.

“Some firms had merged their stockbroking business with their investment bank. Our turnover might not be the biggest, but we have good people,” she added.

Tan said TA Enterprise’s ROE stood at 8% to 10%.

On the recent announcement by Bank Negara Malaysia to develop a framework for financial technology, Tan opined that this would not have much impact on the group’s stockbroking segment, but more on investment banks.

But she did not rule out the possibility to partake in this industry, but will only go into it if they have the expertise.

On TA Enterprise’s high gearing ratio of 1.25 times, Tan said the group’s actual gearing is lesser at one times, which the group is comfortable with.

“We don’t want to bring back the money we made overseas because we don’t want to take exchange-rate risk. Whatever money we make overseas, we don’t want to bring back because I might have good use for it. Our net gearing is only one times, which is still comfortable for us,” Tan said.

She added that the group still had land that it had yet to pledge, such as 2.47 acres of prime land located in the Kuala Lumpur City Centre area.

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This article first appeared in The Edge Financial Daily, on May 31, 2016. Subscribe to The Edge Financial Daily here.