GEORGE TOWN (Aug 19): Penang-based JMR Conglomeration Bhd is upbeat on the prospects of its property development segment and expects its property ventures to contribute to 50% of its topline in its financial year ending March 31, 2016 (FY16), compared with 38% in FY15.
Still, JMR's group managing director Datuk Dr Goh Yong Chee said the group will not neglect its manufacturing business, which comprises the production of asphaltic concrete and quarrying.
“Manufacturing is still our organic business, but we are pushing our property development segment in FY16 onwards, as we have a landbank of close to 200 acres in Penang and Kedah, of which 120 acres is undeveloped,” he told reporters, after the group’s annual general meeting today.
For FY16, the group will be concentrating on its four-phase SA65 Taman Perdana Development mixed development in Simpang Ampat, Penang, which carries a gross development value (GDV) of RM400 million.
The development comprises terrace, semi-detached residential units, and commercial premises.
“Phase 1 of our Taman Perdana Development has been completed, while Phase 2 will be completed at the end of this year. The GDV for both phases is about RM160 million (out of the RM400 million four-phase GDV), of which we have already achieved 80% in sales for both Phase 1 and 2,” said Goh.
The group is looking to launch Phase 3 of the development in the fourth quarter of the year, which is expected to have a GDV of approximately RM100 million, and the launch of phase 4 is planned for next year, depending on market conditions.
JMR will also launch a commercial development by the end of this year, Marvel View, which is located next to the Butterworth Ferry Terminal and has a GDV of RM75 million.
“We are also excited about our first offshore property development in London, United Kingdom (UK), which we plan to kick off by the end of this year, with a GDV of RM35 million...we hope this would kickstart our venture into the UK, not only in property development, but also in the manufacturing sector,” said Goh, but declined to reveal more.
The group is targeting to launch its UK development within the first half of 2016.
“Why we decided to venture into the UK market is we believe that the property market there is still growing, and when we decided to venture offshore, we wanted to go someplace where there was a [strong] currency and where property development regulations are somewhat similar to Malaysia,” said Goh.
He added that the group is still adamant on its UK venture, despite current economic conditions, with the weak ringgit.
“Seeing that the Penang property market was getting a little crowded, we made a decision to go into the UK market two years ago, way before the current weak ringgit levels, and the majority of the target market for our development would be UK residents,” said Goh.
On its future projects, Goh said the group has projects with a combined GDV of RM2.2 billion in the pipeline, to be realised over the next five to ten years.
However, he declined to elaborate what these developments are.
For its first financial quarter ended June 30, 2015 (1QFY16), JMR reported a net profit of RM823,000, which was 8.3% lower than its 1QFY15 net profit of RM897,000, according to its filing to Bursa Malaysia today.
The group had also reported a decrease in revenue of 44.2% to RM6.6 million in 1QFY16, from RM11.83 million last year.
JMR (fundamental: 1.15; valuation: 1.4) attributed the decrease in its financial performance due to its property development projects, which are still in the transition between phases.
Its shares closed up 3 sen or 3% today to RM1.03, giving it a market capitalisation of RM130.6 million.
(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.)