KUALA LUMPUR (Nov 27): Eastern and Oriental Bhd (E&O), which saw its second-quarter net profit jump 15.1% year-on-year on higher revenue, said its Seri Tanjung Pinang Phase 2 (STP2) project is on track with the commencement of reclamation works expected to take place before the year end.
In a statement today, E&O deputy managing director Eric Chan Kok Leong said the syndicated term loan for the project will be signed soon.
Last month, Chinese contractor China Communications Construction Company (M) Sdn Bhd was awarded the RM2.32 billion worth of land reclamation works for STP2.
On the compliance and regulatory front, Chan said all relevant requirements and authorities' approvals for STP2 are in hand. These include the approval of the project's Detailed Environmental Impact Assessment study by the Federal Department of Environment, endorsement of the STP2 master plan and granting of the planning permission for STP2 reclamation works by the Penang state authorities.
Chan also noted that the proposed listing of E&O's subsidiary Eastern & Oriental PLC on AIM of the London Stock Exchange is awaiting approval from the UK Listing Authority and is expected to be listed in the first half of 2016.
On Nov 6, the Securities Commission Malaysia had recognised the proposed restricted offer and proposed Malaysian placing of the securities.
Meanwhile, the lifestyle property developer saw its net profit for the three months ended Sept 30, 2015 (2QFY16) rise to RM24.45 million or 1.99 sen per share from RM21.24 million or 1.74 sen per share a year ago.
Revenue grew 10.9% to RM85.71 million in 2QFY16 from RM77.29 million in 2QFY15.
For the cumulative six-month period (6MFY16), E&O's net profit rose 18.7% to RM47.71 million or 3.89 sen per share from RM40.2 million or 3.29 sen per share in 6MFY15.
Revenue for 6MFY16, however, fell by 25.3% to RM154.6 million from RM207.04 million in 6MFY15, mainly due to lower revenue from the property segment, which registered a decrease of RM53.778 million.
"After incorporating revenue recognised for the joint venture projects, the group recorded an adjusted revenue of RM252.59 million compared with RM236.49 million in 6MFY15, an increase of 6.81%," said E&O.
The group said it locked in new property sales worth RM635 million in 6MFY16, while unbilled sales as at end-September 2015 stood at RM825 million.
Moving forward, E&O said its focus will be on ensuring that it is well-poised for future opportunities, while ensuring that it maintains prudent cashflow management with sound financial planning to address current needs.
"Overall, we do not anticipate any marked change in the market situation for the short term. Nevertheless, we are cognisant of the cyclical nature of the property market, which warrants a longer-term perspective, and we are also aware that demand remains in niche locations and for projects by developers offering strong concept, branding and delivery," said Chan.
"Demand remains in the niche locations and for projects by developers offering strong concept, branding and delivery. We are responding to this with the upcoming launches of the second tower of The Tamarind in Penang and the second phase of Avira Garden Terraces in Medini Iskandar, Johor, which will be launched in the second half of FY16," he added.
E&O shares closed down one sen or 0.64% at RM1.55 today, for a market capitalisation of RM1.9 billion.
(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.)