KUALA LUMPUR (Oct 3): I-Bhd expects to continue its double-digit growth in revenue and profit "for several years" till the property developer reaches its targeted revenue contribution of RM500 million per year from the property development segment in 2018, said its Chief Executive Officer Datuk Eu Hong Chew.
"By then, the group’s revenue and earnings will commensurate with our billion ringgit shareholder funds," he said in a statement today.
For the first six months of this year, I-Bhd saw its net profit more than double to RM25.51 million, from RM11.71 million a year ago; while revenue grew 90% to RM115.56 million, from RM60.95 million.
I-Bhd had earlier unveiled its business plan to achieve RM500 million in revenue contribution from its property development segment by 2018.
By then, the group also targets to scale up to RM1 billion worth of investment properties, from RM77 million currently, with its investments in shopping mall, car parks, data centres and hotels, while revenue contribution from its leisure business is targeted to reach RM100 million.
"Based on this revenue profile, some 50% of the group’s earnings would come from recurring income, that is, from the investment properties and leisure segments, with the balance coming from property development," said Eu.
In the statement, I-Bhd said its renounceable rights issue and offer for sale of irredeemable convertible unsecured loan stocks (ICULS) have been oversubscribed by 8% and 12.8% respectively.
It received 1,908 applications for 309 million rights shares, with a total value of RM213.2 million, representing an excess of 22.8 million shares or 8%, over the allotment of 286.2 million rights shares.
The rights issue comes with 57.2 million five-year detachable warrants, on the basis of five rights shares for four existing shares at 69 sen per share, and one warrant for every five rights shares subscribed.
I-Bhd, meanwhile, saw 1,540 applications for 326 million ICULS, worth a total of RM163 million. This represents an excess of 36.9 million ICULS applications or 12.8%, over the allotment of 289.1 million ICULS.
The ICULS were offered for sale by Sumurwang Sdn Bhd to I-Bhd’s minority shareholders, on the basis of five ICULS for every one existing share held.
“We believe that the double-digit growth achieved over the past few quarters, as well as the bright future outlook for I-Bhd, have contributed to this confidence,” said Eu.
Eu noted that the corporate exercise has a two-pronged objective of ensuring that the group remains financially strong as it builds up its investment property portfolio, while at the same time enhancing shareholders returns.
“The corporate exercise is also intended to create shareholders returns by enhancing our valuation multiple. In this context, we are making the share price affordable with the share split.
"We are also increasing the free float of shares, so that the public spread will increase from 25% to 40%, as well as giving us an opportunity to attract more institutional investors at the end of the exercise," he said.
"Our recent announcement of a 30% dividend payout policy, is another component of the institutional investors plan. To meet the institutional investors’ requirements, we are even prepared to have a public shareholding spread of 49%," Eu added.
Upon the completion of the corporate exercise, I-Bhd will see its shareholder funds increasing to RM1 billion and its paid-up capital to 1.4 billion shares of 50 sen par, compared with its pre-exercise paid up capital of 114 million shares of RM1 par.
The corporate exercise is expected to be completed by Oct 14, with the listing of rights shares, warrants, and ICULS on Bursa Malaysia.
The ICULS are convertible into new I-Bhd shares, on the basis of 136 ICULS for 100 ordinary shares. The conversion will not involve any more cash injection.