KUALA LUMPUR (Sept 29): Ireka Corp Bhd is targeting its demerger from London-Stock Exchange-listed Aseana Properties Ltd to be completed by the end of this year.  

The exercise, first announced in May, involves separating the interests of Ireka group from 23%-owned Aseana. 

It also includes Aseana buying back Ireka’s shares in Aseana, in exchange for certain assets owned by Aseana, namely The RuMa Hotel and Residences in Kuala Lumpur and a parcel of land in Kota Kinabalu.  

Ireka group deputy managing director Monica Lai Voon Huey said the exercise is currently awaiting the approval of Bursa Malaysia and the Securities Commission (SC), before the group is allowed to convene an extraordinary general meeting (EGM) to seek shareholders’ approval.    

“The demerger plan is a significant exercise for Ireka, so SC and Bursa will need to approve the proposal. Also, it is a related-party transaction, so there will be an independent [adviser] to see if this is a reasonable or fair transaction. All those are ongoing processes, we hope we are able to get something out there before the end of October (approval from the regulators),” Lai told a press conference after Ireka’s annual general meeting today.   

Post-exercise, Ireka will increase its stake in RuMa Hotel and Residences to about 77% from 30%. Lai said the hotel business is slated to resume operations on Oct 7, after being suspended for eight months since March due to the movement control order (MCO) implemented by the government to curb the spread of the Covid-19 virus.  
 
As for the parcel of land in Kota Kinabalu, the group intends to build a senior living facility there in future, given that the group has experiences in hospitality and property development.  

Meanwhile, loss-making Ireka expects to see some improvement in its performance for the current financial year ending March 31, 2021 (FY21), helped by a low interest rate environment.  

The bottomline will be driven by the unsold units from its existing properties, namely KaMi Mont’Kiara Residences, Dwi@Rimbun Kasia in Nilai, Negeri Sembilan and an industrial park development at ASTA Enterprise Park Kajang (Phase Two). 

“We have been aggressively pushing out the sales incentives and packages to entice people to buy the property,” Lai said, adding that the group has also slowly switched its promotional activities to social media platforms in view of the pandemic.  
 
To-date, KaMi Mont’Kiara Residences has recorded 95% sales, while Dwi@Rimbun Kasia has sold up to 60%. The current unbilled sales total about RM200 million. 

Ireka managing director Datuk Lai Voon Hon expects the property market to improve by the middle of next year, and hence the group will only plan to launch new developments in FY22.  
 
For the battered construction segment, he said it is set to recover in 2021 as he anticipates the government to pump-prime the sector to boost economic recovery under the upcoming Budget 2021 and 12th Malaysia Plan, considering the sector has the most multiplier effect on the economy.  
 
“We are cautiously confident that the construction segment should rebound next year. I do not think it will get any worse than this year in terms of construction activity.,” he said. 
 
Ireka's construction activities have fully resumed, he said, following the pandemic disruption.

To-date, the outstanding orderbook for the construction segment stands at RM320 million and should provide an earnings visibility of about 15 months for the group, he added.  
 
Ireka’s net loss narrowed to RM8.81 million in 1QFY21, from RM10.26 million a year ago, helped by lower expenses and cost of sales. 

Revenue for the quarter fell 32.15% to RM14.73 million from RM21.71 million, as the construction, property development and trading and services segments were hit by the pandemic and the MCO. 

Ireka’s share price last closed at 37 sen, giving it a market capitalisation of RM69.08 million. Year-to-date, the counter has fallen by 21%.