KUALA LUMPUR: Ekovest Bhd, controlled by tycoons Tan Sri Lim Kang Hoo and Datuk Haris Onn Hussein — brother of Defence Minister Datuk Seri Hishammuddin Hussein — enjoyed brisk sales at the launch of its EkoCheras development over the weekend, unfazed by the slowdown in the property market and ahead of the goods and services tax roll-out.
“In the first hour of our launch, we managed to sell 40% of our [105] office units and 50% of our [260] hotel suites,” said its managing director Datuk Lim Keng Cheng at the launch on Saturday.
At press time, 80% of the office and hotel suites have been taken up, which will add approximately RM150 million to RM200 million to the group’s unbilled sales.
“In Cheras, there aren’t any Grade A offices available — like the ones you find in the city centre,” said Lim, explaining the strong take-up of the office suites despite a glut in office space supply.
“We are a conservative company. We are selling the office and hotel suites to reduce our risk.
“It also gives us more funds to take on other projects and grow the business,” said Lim, when asked why the group opted to sell the office and hotel suites, instead of keeping them for recurring income.
Ekovest (fundamental: 1.5; valuation: 2.4) hopes to launch over RM7.5 billion worth of gross development value (GDV) over the next few years, including projects like Eko Titiwangsa and Eko Gateway.
EkoCheras is an 11.326-acre (4.58 hectares) mixed development with a total GDV of RM1.93 billion, consisting of four residential towers in addition to the office and hotel suites, which will sit on a four-storey shopping mall.
The residential units have been mostly sold out after their launch in December last year with a 90% take-up rate, not including the bumiputera units which can be released once construction passes 50% completion.
“Earnings contribution from EkoCheras will start this year. We can’t recognise earnings when we are building the basement and the foundation, but once we start to work on the residential units, we can begin to recognise earnings,” said Lim.
The entire EkoCheras development is expected to be completed by November 2017.
Meanwhile, Lim expects Ekovest’s earnings to rebound this year after a 46% year-on-year fall in net profit to RM3.2 million in its second financial quarter ended December 2014.
On Phase 2 of the Duta-Ulu Klang Expressway, Lim said the construction between Sri Damansara and Segambut is 34% complete.
“It is slightly ahead of schedule and we are confident that [our wholly-owned subsidiary] Kesturi (Konsortium Lebuhraya Utara-Timur [KL] Sdn Bhd) will be able to complete it by December 2016,” he said.
Ekovest shares closed 3.77% higher at RM1.10 last Friday, bringing a market capitalisation of RM941 million.
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This article first appeared in The Edge Financial Daily, on March 16, 2015.