In a bid to improve its financial standing amidst an absence of major launches, MK Land Holdings is raising cash by selling land, according to a report from The Star.
Earlier last week, the company revealed plans to dispose nine plots of leasehold land with a combined area of around 195.84 acres at Kamunting in Perak for RM72 million.
From the divestments, the developer expects to register a net gain of RM32.14 million, which represents a profit after tax of two years. For the fiscal year ended 30 June 2016 (FY2016), it achieved a net profit of RM16.3 million compared to RM53.9 million in FY2015.
According to research house PublicInvest, MK Land’s net profit of RM8.5 million for the first half of FY2017 is estimated to account for 31 percent of its full-year earnings. The developer’s loans also presently stand at RM33.95 million, of which RM27.42 million is long-term.
The company intends to use RM47 million from the proceeds of the land sale as working capital, while the remaining RM25 million will fund ongoing and future projects.
PublicInvest said the firm’s net cash is expected to grow to around RM122 million or 10 sen per share once the sale is completed in 18 months.
While it considers the land sale as positive for MK Land, it thinks the developer’s core net profit will remain low over the near term due to the absence of new major property launches.
At present, MK Land has nearly 5,000 acres of land. Over 4,000 acres are located in Perak, of which 3,000 acres are situated in Lembah Beriah.
According to PublicInvest, the Setiawangsa land could be sold for about RM96 million or RM40 psf, while the five-acre parcel in Damansara Perdana could be disposed for RM500 psf. Based on its estimates, the pieces of land have a net asset value of RM40 psf and RM200 psf respectively.
The research house also revealed that after MK Land unveiled the first phase of Residensi Suasana@Damai condo in 2016, the developer has stopped rolling out new developments in Klang Valley. With a gross development value of RM400 million, Suasana@Damai is targeted to be built in three phases.
“Going forward, we believe that new sales might be helped by en-bloc sales for its new project to minimise selling risks. As for unsold stocks, we understand that it still has around RM100 million worth of unsold units from Armanee Terrace and around RM600 million from the remaining phases of the semi-detached The Rafflesia,” it noted.
The company, which is known for building low-cost housing, also intends to construct 500 units of affordable homes in Perak this year, with one-storey residences costing below RM300,0000 each.
Furthermore, MK Land hopes to resume the development of the 3,000-acre Bandar Teknopolis Perdana. Formerly known as Lembah Beriah, construction on the mixed-use project was stopped after the first phase of its residential component was unveiled a decade ago.
Image sourced from MK Land
Radin Ghazali, Content Writer at PropertyGuru, edited this story. To contact her about this or other stories email radin@propertyguru.com.my
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