Bina Darulaman’s earnings growth to continue in 2H

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(From left ) PKNK senior manager, corporate and legislation, Ahmad Hajazi Ishak; PKNK chief executive Datuk Abdul Rahman Ibrahim; Izham; and Bina Darulaman director Datuk Mohd Nasir Ahmad at the signing ceremony of the sales and purchase agreement in Kuala Lumpur yesterday.

PETALING JAYA: Kedah-based construction and property development company Bina Darulaman Bhd believes that its earnings growth in the first half of the year is likely to continue into the second half.

The group’s managing director Datuk Izham Yusoff said its second half growth earnings will be driven by its property development segment, which contributes the largest chunk of its income.

Besides the property development segment, Bina Darulaman is also involved in road and quarry as well as construction sectors, mostly in Kedah.

“The group’s second half growth will mostly be in line with the first half. I don’t want to give too rosy [a] picture to investors because it is too early to say how the second half will look like. But we are confident with what we have now and [that we] will do as well as we did in the first half,” said Izham.

In the first half ended June 30, 2014 (1HFY14), Bina Darulaman made RM11.02 million in net profit, 3.08% higher than the previous corresponding period, on the back of RM127.64 million in revenue.

Its property development segment contributed 48% to the group’s operating profits of RM22.24 million.

While the group expects its property development segment to continue to grow in the second half of the year, the road and quarry segment would likely stabilise, said Izham.

The segment’s revenue dropped 29% to RM14.9 million in 1HFY14 due to lower demand for quarry products.

Izham was speaking to reporters after the signing of a sales and purchase agreement with Perbadanan Kemajuan Negeri Kedah (PKNK) to buy some 467.41ha of land in Kedah at Bina Darulaman’s office at Menara Glomac yesterday.

The property being acquired from PKNK will boost Bina Darulaman’s land bank in Kedah to more than 2,000 acres.

Some RM83.11 million of the RM95 million that it has proposed to raise via a rights issue will be used to fund the purchase of the land.

The remainder of the purchase price of RM118.89 million will be covered by a share swap with PKNK via the issuance of 47.56 million new shares at an issue price of RM2.50 each.

After the share swap, PKNK’s stake in Bina Darulaman will increase to 68% from 54.5% as at Aug 4. This will leave Bina Darulaman’s public shareholding spread at 32%, said Izham.

Of the tracts of land that it is buying from PKNK, part of them would be used to build a tourism product, while the others are slated for integrated townships that will include affordable houses and commercial properties, said Izham.

“This will place Bina Darulaman in a better position to reach out to a broader range of customers by offering residential, commercial and mixed development townships.

“It will also assist us in realising Bina Darulaman’s vision to be a partner of the government in primarily developing township and infrastructure, and construction,” he said.

The demand for residential property in Kedah is expected to remain favourable among local buyers, said Izham, but added that property developers have got to offer the right type of property at the right price level.

On that note, he said the group will undertake careful market surveys and analyses prior to finalising the development plan of its land bank.

Bina Darulaman’s share price has rallied 50% so far this year to yesterday’s close of RM2.40, before it was suspended at 10.40am pending the announcement of the acquisitions and the proposed rights issue. Its shares will resume trading today.

This article first appeared in The Edge Financial Daily, on September 5, 2014.