KUALA LUMPUR: Asian Pac Holdings Bhd is moving ahead with three property launches next year — two in the Klang Valley and one in Johor which has been held back since 2014 — despite the softer real estate market.

Acknowledging the challenging year ahead, Asian Pac managing director Datuk Mustapha Buang said the company is looking to launch its Damansara 8 @ Damansara Damai mixed development, a similar project in Kepong, and 30 units of shop offices in phase 2 of Dataran Larkin in Johor in financial year 2016 ending March 31, 2016 (FY16).

The company is banking on the three to pull it out of the losses it recorded in the first quarter ended June 30, 2015 (1QFY16).

“We are not as bullish as before,” he told reporters after the company’s annual general meeting yesterday.

“We are cautiously moving forward. We should be able to maintain our performance this financial year with the right products and pricing,” he said.

Mustapha said the soft property market had affected sales and that bank’s stringent lending guidelines do not help matters.

“For every 10 submissions we make, three or four get rejected. Most are making their second or third property buys,” he said.

However, he maintains Asian Pac is considered lucky as many of its projects were launched two to three years ago, when the property market was robust.

Damansara 8, yet to be launched, carries a gross development value (GDV) of RM330 million, while the mixed development in Kepong has a GDV of about RM350 million.

As for phase 2 of Dataran Larkin, comprising three-storey shop offices, it has a GDV of 53 million. In total (phase 1 and 2), Dataran Larkin’s GDV is RM163 million.

“The Johor property market is quite dampened. But most of the first phase of Dataran Larkin is now occupied so business seems to be booming. So we are confident of getting a good response to phase 2,” he said.

He also said buyers are looking for affordability of properties, and the company is looking to reduce the size of its residential products to between 650 sq ft and 1,000 sq ft to price them below RM400,000 per unit.

Asian Pac slipped into the red in 1QFY16, with a net loss of RM6.93 million compared to a net profit of RM3.97 million in 1QFY15, mainly due to decreased revenue from its property development division; revenue shrank almost threefold to RM21.07 million in 1QFY16 from RM61.78 million previously.

Mustapha said recurring income from the company’s Imago Mall in Kota Kinabalu, Sabah, and car park operations will bolster the company’s financial performance in FY16.

Asian Pac (fundamental: 1.55; valuation: 2.4) is targeting a 30% earnings contribution from recurring income and 70% contribution from its property development.

Its unbilled sales now stand at RM350 million, which will be delivered by 2017, said Mustapha, adding that Asian Pac is also eyeing the Penang and Sandakan property markets.

It is also in the midst of finalising plans for its maiden township on 400 acres (162ha) of land in Labu, Negeri Sembilan, which is projected to be launched in 2017. 

Its counter closed unchanged at 20 sen yesterday, with a market capitalisation of RM193.55 million. 

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This article first appeared in The Edge Financial Daily, on September 22, 2015.