PETALING JAYA (June 24): Encorp Bhd has inked a memorandum of understanding (MoU) today with the Federal Land Development Authority (Felda) for the development of a proposed integrated township on a 640.98-acre land in Bukit Katil, Malacca, with an estimated gross development value (GDV) of RM4.9 billion.

“We are planning a mixed development project in Melaka. The leasehold land is owned by Felda; and Encorp will be the developer.

"Once we have a clear detail, we hope to finalise the agreement and construction will start by 2017. Because it is a township, the development will span across 10 years," Encorp's chairman Tan Sri Mohd Isa Abdul Samad told reporters, after witnessing the signing of the MoU between Encorp and Felda here today.

According to Mohd Isa, Encorp (fundamental: 0.35; valuation: 2) plans to launch the mixed development township as early as the third quarter of 2017, in which 80% of the development will be residential projects such as affordable, mid-range and high-end properties.

The remaining 20%, he added, will be commercial developments that will include office and retail lots.

"Melaka presents a good opportunity for us. Our township will be close to urban public transportation. We were made to understand that one of the stops for the high speed rail will be at Melaka International Trade Center. If that is true, that will certainly be positive to us, as it will be close to our township area," he said.

Meanwhile, in Encorp’s filing with Bursa Malaysia today, the MoU stipulated that Felda will provide the land in Bukit Katil Land to Encorp, free of all encumbrances, for the purpose of the proposed development of commercial and housing projects.

Under the MoU, Encorp will develop the master plan for the proposed development and investment proposal, outlining the business model propositions, development timeline, projected cash flow requirements and anticipated GDV of the project.

Encorp will also manage and coordinate the master planning, as well as develop and construct the proposed township, it added.

The company said the MoU will expire a year from today, or until the execution of a definitive agreement between the two parties, or be extended by mutual agreement between the two.

Encorp, of which FELDA’s investment arm Felda Investment Corporation Sdn Bhd (FIC) is a major shareholder with a 70.97% stake, said the MoU paves the way for a definitive agreement and allows the group to replenish its landbanks.

The MoU also assists the land authority in maximising the potential of its high amount of landbanks, by leveraging on Encorp’s strength in property development, it added.

Encorp said that should a definitive agreement materialise from the MoU, it will positively contribute to the future earnings of the company.

Encorp's shares closed 8 sen or 7.62% higher at RM1.13 today, for a market capitalisation of RM308.87 million.  

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