Titijaya scales down 2016 sales target

Titijaya Land Bhd has targeted RM400mil in sales for the financial year ending June 30, 2016, 20% lower than the RM500mil of sales it achieved in FY15. The prudent move is in light of the soft economic climate.

Deputy group managing director Lim Poh Yit said Titijaya would scale back its launches in order to be cautious moving into the new financial year, in spite of its net cash position.

“We had initially planned for more aggressive launches but looking at the economy we have to be prudent,” he said.

In FY16, Titijaya will launch three projects – phase 2 of high rise residences H2O in Ara Damansara, landed residences in Cheras and office suites Emporia at Shah Alam – which will have a collective gross development value of RM400mil.

“For now, we will focus on projects in the Klang Valley and in Penang,” Lim said.

Some of its ongoing projects in the Klang Valley are the Seri Alam Industrial Park and Seri Alam residences and semi-detached factory units Zone Innovation Park in Klang, which have an estimated GDV of RM281.5mil, RM340mil and RM228.7mil, respectively, as well as residential developments 3elements in Sri Kembangan and Embun & Emery, which have a GDV of RM435mil and RM259.9mil, respectively.

In Penang, Titijaya is planning a mixed development project on a 20.3-acre parcel in Batu Maung.

Lim said acquisition of the land should be finalised by year-end and approval of the land’s development plans, which had to be resubmitted, would be finalised by the third quarter of 2016. He declined to comment on why the resubmission had to be done.

The group has a total landbank of 432 acres, valued at RM8.6bil.

“As part of our group strategy, we will be forming partnerships and joint ventures with land owners,” Lim said. “We will be very selective about location.”

For the fourth quarter ended June 30, 2015, Titijaya posted a net profit of RM18.3mil, 9% lower from RM20.1mil in the same period last year. Revenue came in at RM66.5mil, dipping 19.7% from RM82.8mil last year.

The group attributed the performance to profit recognisition on lower margin projects Embun & 3elements as well as Seri Alam Phase I and II.

Meanwhile, Titijaya is in the process of locking down anchor tenants for its upcoming mall Emporia as well as retail lots in 3elements in Sri Kembangan. “Although most shopping malls are facing difficult times, we hope that in a few years, upon completion of ours, the market condition would have recovered,” Lim said.

Titijaya group managing director Tan Sri Datuk Lim Soon Peng said there was great demand for properties in Malaysia, especially in Penang that appealed to foreigners from Hong Kong, Singapore, China and Taiwan, due to the depreciation of the ringgit.

“There have also been many buyers from neighbouring states Kedah, Perlis as well as (principal town) Butterworth,” Soon Peng said.

“We expect some 15%-20% of foreign investors to buy into our project in Batu Maung. Our residential units there will be going at about RM500,000-RM700,000 each.”

He added that the depreciation of the ringgit had not severely affected its development costs as 90% of its materials were sourced locally.

Speaking on the upcoming Budget 2016, Lim said he hoped the Government would allow banks to loosen their financing schemes as they were now tightly controlled. Yesterday, shares of Titijaya closed up three sen at RM1.73, one of the lower points this year where the stock has hovered after falling from its highest point of RM2.05 in February. - By The Star