This article first appeared in The Edge Financial Daily on June 1, 2017

KUALA LUMPUR: Marco Holdings Bhd, the distributor of Casio watches, calculators, digital cameras and musical instruments, plans to expand its business into property development in the next two years.

Marco chairman and non-executive director Tan Sri Robert Tan Hua Choon said it is mulling a plan to develop a piece of industrial land in Setapak here.

“We are planning a condominium project in Setapak. We hope to develop the land in the next two years,” he told the reporters after Marco’s annual general meeting yesterday. Tan, 76, is the single largest shareholder of Marco with an 19.71% equity interest.

A quick check of Marco’s annual report 2016 showed that the Setapak land, measuring 10,112 sq m, was acquired by the group in 1998. The land’s 99-year lease will be expiring in 2093. As at Dec 31, 2016, its net book value stood at RM12.37 million.

Tan stressed that Marco does not intend to sell the Setapak land, as the group is keen to develop it once it converts the land to residential use.

He declined to provide more details on the condominium project as it is still at a “very early stage”.

“The plan is still on the drawing board, so there is nothing concrete at the moment. By developing the land, we believe we [can] create better shareholder value [than selling it],” said Tan.

Marco also owns another piece of vacant land in Bukit Katil, Melaka. The land, measuring 61,432 sq m, was acquired by the group in 1995. This land, with its 99-year lease expiring in 2102, carried a net book value of RM28.86 million as at Dec 31 last year.

On the outlook for Marco’s traditional businesses, Tan said the group “is not looking at much growth” this year, mainly due to weak consumer sentiments.

“Consumers remain cautious in their spending due to the higher cost of living. Overall, the retail market is slowing down, so we expect a very tough and challenging year in 2017,” he said.

For its financial year ended Dec 31, 2016 (FY16), Marco’s net profit fell 13% year-on-year to RM17.3 million, due to higher operational costs and margin compression as a result of the weaker ringgit and intense competition.