KUALA LUMPUR: UDA Holdings Bhd, a unit under the Ministry of Finance tasked to spearhead bumiputra interests in the property sector, expects the upcoming Bukit Bintang City Centre (BBCC) development to contribute substantially to its bottom line.
“BBCC is the most valuable asset to UDA. In terms of profit, the project will give UDA approximately RM100 million a year during the next eight years of its development period,” UDA chairman Datuk Johari Abdul Ghani told The Edge Financial Daily when contacted.
Apart from development profit, Johari expects UDA to rake in a recurring income of about RM80 million a year from the BBCC, from the commercial components to be retained by UDA for rental income purposes.
The concept is a mixed development including apartments, office hotel, shopping mall and entertainment centre, he said. According to Johari, the gross development cost of the BBCC is estimated at RM6 billion, translating into a development profit of RM2 billion from a total gross development value (GDV) of RM8 billion.
To formalise the joint venture, UDA, Eco World Development Group Bhd (Eco World) and the Employees Provident Fund (EPF) are set to sign the joint development agreement on BBCC today.
The 20-acre (8.0937ha) project will be jointly developed by a consortium company, BBCC Development Sdn Bhd, with UDA and Eco World (fundamental: 0.95; valuation: 0.3) each holding a 40% stake in BBCC Development, while the EPF will have 20%.
Johari explained that the EPF’s investment committee had approved for the fund to participate in the consortium, similar to London’s iconic Battersea Power Station, in which Sime Darby Bhd and S P Setia Bhd each has a 40% stake in Battersea Project Holding Company Ltd, while the EPF has the remaining 20%.
On Eco World’s participation, Johari brushed news reports stating that the BBCC project had been awarded to the former, explaining that under “this joint venture the land remains under UDA”. He noted that UDA will only give development rights to the consortium.
UDA, which started off as the Urban Development Authority (UDA) in 1971, was listed on then the Kuala Lumpur Stock Exchange in 1999, but was delisted in 2007.
Johari, who was appointed chairman in July 2013, had previously said a relisting for UDA is possible in the future seeing that it is short of land bank and capital.
A recent companies search showed that UDA posted lower net profit of RM33.52 million in the financial year ended Dec 31, 2013 (FY13), compared with RM125.61 million in FY12. Nevertheless, its gearing has reduced to 0.42 times for FY13 compared with 1.26 times for FY09.
As at FY13, UDA’s total assets were worth RM2.3 billion, against total liabilities of RM676.7 million.
Apart from property development, UDA operates several malls in the Klang Valley, Johor and Perak. They include BB Plaza in Kuala Lumpur, UTC Kuala Lumpur (formally known as Pudu Sentral), Angsana Johor Baru Mall, Cahaya Suria in Kuala Lumpur, Sinar Kota in Kuala Lumpur and Angsana Ipoh Mall.
The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. Go to www.theedgemarkets.com for details on the company’s financial dashboard.
This article first appeared in The Edge Financial Daily, on February 4, 2015.