KUALA LUMPUR (Jan 22): The depreciating ringgit is deemed a "silver lining" for the Malaysian property industry, as local real estate would be priced more competitively against world markets, according to IJM Land Bhd CEO Datuk Soam Heng Choon.
Soam said a weaker ringgit would not affect developers' costs, as long as they did not use imported goods.
"This is actually a silver lining for us. Chances are that people will come to Malaysia to buy properties, because it will become cheaper.
"As long as we don’t use any imported goods, we’re okay," Soam told reporters here today, on the sidelines of the launch of IJM Land's (fundamental: 2.2; valuation 1.8) Sherwood Kinrara South project.
At 3.11pm, the ringgit changed hands against the US dollar at 3.6068. This compared to 3.1463 in August 2014.
The ringgit's weakness came against a spectre of slower Malaysian economic growth, as lower crude oil prices hit government income and deficit levels. The ringgit also weakened against a firmer US dollar, after the International Monetary Fund upgraded its US economic growth forecast.
Construction firm IJM Corp Bhd is privatising IJM Land at RM3.55 a share. At 3.17pm, IJM Land shares rose as much as six sen or 1.8% to RM3.47 for a market capitalisation of RM5.41 billion.
A total of 548,800 shares were traded.
Soam dismissed rumors that the privatisation would slow down IJM Land's development.
He said upon completion of the exercise, IJM Land would leverage IJM Corp's (fundamental: 1.6; valuation 2.4) balance sheet.
“We’ll be able to operate faster, which is one of the reasons we are privatising,” he said.
IJM Land will seek shareholders' approval on the privatisation, at an extraordinary general meeting this Feb 12.
Looking ahead, Soam said IJM Land would be kept busy by its 15 local projects, collectively valued at about RM3 billion. He said the company had a landbank of over 2,000 ha (5,000 acres), with a gross development value of over RM30 billion.
Soam said the company would have several projects in Penang, coming on stream.
“We have Light Phase 2 development — a commercial development coming on stream in Penang. We will also use some of our remaining cash for land acquisitions,” said Soam.
(Note: 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.)