PETALING JAYA: Encorp Bhd will team up with the Federal Land Development Authority (Felda) to develop an integrated township in Bukit Katil, Melaka, which will have an estimated gross development value (GDV) of RM4.9 billion.

“We are planning a mixed development in Melaka. Spanning 640.98 acres (259ha), the leasehold land is owned by Felda and Encorp will be the developer,” Encorp chairman Tan Sri Mohd Isa Abdul Samad told reporters after witnessing the signing of a memorandum of understanding (MoU) between Encorp and Felda yesterday.

"We hope to finalise the agreement and begin construction [of the township] by 2017, which will span 10 years," he said.

Mohd Isa is also the group chairman of Felda, which owns a 70.97% stake in Encorp via Felda Investment Corp Sdn Bhd.

Mohd Isa said Encorp plans to launch the township as early as the third quarter of 2017. The residential component will comprise 80% of the development.

The remaining 20% will be commercial units including office and retail lots.

"Melaka presents a good opportunity for us. Our township will be close to the urban public transport.

“We are made to understand that one of the stops for the high-speed rail will be at the Melaka International Trade Centre. If that is true, that will certainly be positive to us as it will be close to our township area," said Mohd Isa.

Currently, Encorp's total outstanding GDV stands at RM500 million.

Going forward, Isa said Felda may inject some of its land bank into Encorp for property development.

"We will position Encorp to be the property development arm of Felda, just like Felda Global Ventures Holdings Bhd is the plantation arm of Felda," he said.

According to its annual report 2014, Encorp currently has a total land bank of 277,302 sq m, with a total net book value of RM94.637 million.

Under the MoU, Felda will provide the land in Bukit Katil to Encorp free of all encumbrances for the proposed development, while Encorp will develop the master plan.

Encorp (fundamental: 0.35; valuation: 2) shares closed eight sen or 7.62% higher at RM1.13 yesterday, with a market capitalisation of RM308.87 million.

This article first appeared in The Edge Financial Daily, on June 25, 2015.