PROPERTY developer Yu Neh Huat Bhd will be making its presence felt in the Klang Valley property scene to ride on the strong demand for niche residential properties here. The move is part of the group's expansion plans to venture into the fast growing and exciting market of the Klang Valley, and to diversify out of its market strongholds of Sitiawan, Seri Manjung and Lumut in Perak.
To kick off its foray into the Klang Valley, the group will be launching its maiden development featuring 250 units of serviced apartments near the Kuala Lumpur City Centre (KLCC). The freehold land was acquired for about RM20mil about two to three years ago, and the development would translate into a gross development value (GDV) of RM180mil to RM200mil. Construction for the serviced apartments will begin in the next few months for completion in three years.
The units, with built-up areas from 500 to 2,000 sq ft, will be priced from about RM800 per sq ft. Chan Yan Meng showing the key areas of the Manjung Point township located along the existing Ipoh-Lumut highway and between Lumut and Sitiawan. With him is accountant Lim Wen Tzer.?We are talking to several parties to manage the serviced apartments and are confident of tying up with a renowned operator to turn the property into a highly sought-after address,? Yu Neh Huat executive chairman Datuk Dr Yu Kuan Chon told StarBiz in an interview.
The group has also purchased a three-acre parcel near Garden International School in Mont'Kiara for a luxurious condominium development. The 28- and 29-storey blocks will have a total of 230 condominium units. The 2,000-sq ft units with full condominium facilities will be priced from RM330 psf for a GDV of RM130mil. Construction is expected to take off by the middle of next year for completion in three years. Another Yu Neh Huat project in the Klang Valley will be located in SS14 in Subang Jaya. The RM50mil low-density condominium enclave will feature 70 to 80 units of between 2,000 and 2,500 sq ft priced from RM250 psf. Slated for launch in the first quarter next year, the project will also take about three years. ?We are eyeing a few more parcels of five to 30 acres land in Mont'Kiara and the Kuala Lumpur city centre for niche developments, including luxurious condominiums, as well as gated and guarded community developments.
These projects will have fast turnaround time and offer good profit margins for the group,? Yu said. He said most of the group's projects had a turnaround time of between 12 months and 1½ years. Its landed projects normally take only a year to complete compared with the industry norm of two years. ?While venturing into other niche market segments, we will continue to pay attention to our bread-and-butter business of building affordable homes for the Manjung district folks. The development there will keep us busy for the next 20 to 25 years and provides a stable earnings stream for the group,? Yu said. Yu Neh Huat's share capital of RM265mil will be expanded to RM350mil after the 85 million bumiputra shares are placed out in the next two months. This will allow the group to pare down its debt and to acquire new land bank. On its dividend payout policy, Yu said the group was committed to pay 10 sen per share for the current financial year ending Dec 31, 2004. Analysts are confident of Yu Neh Huat's earnings potential with its good land bank and product offerings. They expect to see a minimum of 20% earnings growth a year for the next few years. ?It is in its early stages of growth and can expect to register 20% to 30% growth in net earnings over the next two to three years,? an analyst with a local brokerage said.
Net earnings for the group's first quarter ended March 31 are expected to be between RM9mil and RM10mil. Its borrowings of about RM61mil to shareholders' fund of RM270mil translate to a gearing of 0.22 time. Lending credence to the group's strong potential is the fact that 45% of its shareholding is held by institutional investors who are mostly insurance institutions and bank-backed asset management companies. The Yu family holds a 52% stake in the group. A senior research analyst with a foreign brokerage said the three new projects coming onstream in the Klang Valley would be able to contribute between 40% and 50% to group earnings and sales in the next two to three years. ?The group has the advantage of having very strategic and well-located projects which will certainly help to earn it a good name in the new markets it is venturing into,? said the analyst. Its land bank of 1,127 acres should underpin development efforts over the next 10 years. ?
Through several savvy purchases in recent years, from Danaharta and other parties, the group looks well placed to tap robust demand for housing and commercial properties in the Klang Valley and Perak,? he said. Its stable recurrent income from the Manjung development will provide the necessary cashflow for the acquisition of strategic land for its foray into more niche developments. Manjung, with a population of 200,000, is a very stable market for the group as there is a ready demand from the nearby Lumut Dockyard. The 1,000 to 2,000 new personnel recruited by the dockyard a year need a regular supply of residential units.
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