cash flow


Hyflux’s restructuring agreement to bode well for Maybank — Analysts

KUCHING: Hyflux Group’s (Hyflux) restructuring agreement with SMI Investments Pte Ltd (SMI) has been viewed positively by analysts and this development could also bode well for Malayan Banking Bhd (Maybank). In a report, the research arm of AmInvestment Bank Bhd (AmInvestment) noted that Maybank’s exposure to Hyflux group totalled RM1.95 billion (S$658.6 million) which comprised […]

Felcra looking for potential buyer for Menara Felcra

KUALA LUMPUR, Oct 19 — Felcra Bhd is looking for potential buyers for its Menara Felcra project in Jalan Sultan Yahya Petra which is 50 per cent complete. Chairman Datuk Mohd Nageeb Abdul Wahab said Felcra had already held discussions with several…

Volvo lorry sales keep on truckin’ in US

STOCKHOLM, Oct 19 — With the US economy continuing to fire on all pistons sales by Swedish lorry maker Volvo Group rose by nearly a third in North America in the latest quarter. With overall sales up by a fifth, Volvo Group’s net profit leapt by…

Gabungan AQRS Q3 earnings surge 80.7%

PETALING JAYA: Gabungan AQRS Bhd's net profit for the third quarter ended Sept 30, 2018 jumped 80.69% to RM17.05 million from RM9.43 million a year ago thanks to higher contribution from the construction division.

Its revenue almost doubled to RM159.27 million compared with RM80.45 million in the previous year's corresponding quarter.

For the nine months period, its net profit went up 60.39% to RM52.62 million from RM32.81 million, while revenue increased 48.47% to RM473.96 million from RM319.23 million.

“The group anticipates a better financial performance in FY2018 compared to FY2017, propelled by the construction division, and thereafter from FY2019 to FY2021, we expect further improvement to our revenue, earnings and cash flows as the property development division begin to contribute positively alongside the existing construction division,” Gabungan AQRS said.

In addition, the group remains committed to ensuring that the fundamentals of the business operations continue to be efficiently managed, including the monitoring of its cash flows, operating expenses and finance costs.

“Aside that, all of our ongoing projects are being monitored closely to ensure efficient cost control and timeliness to safeguard our margins.”

India's Reliance reports 17.3pc rise in profits

MUMBAI, Oct 18 — Indian conglomerate Reliance Industries yesterday reported a 17.3 per cent rise in consolidated net profit boosted by strong revenues from its telecom venture Jio and margins from its core business of oil refining. The…

Barakah Offshore obtains court order to stave off creditors

PETALING JAYA: Financially distressed Barakah Offshore Petroleum Bhd has been granted orders by the High Court of Malaya restraining all proceedings and actions brought against the group and its wholly owned subsidiary PBJV Group Sdn Bhd.

The order is valid for a period of 90 days, from Oct 12, 2018 to Jan 9, 2019, according to its filing with the stock exchange.

Barakah said the order was applied for as part of the group’s proactive measure to manage its debt levels. The order allows it to negotiate terms with its lenders and creditors without having the threat of any proceedings and actions.

It stressed that none of the group’s lenders have called for an event of default on any of its financing facilities prior to obtaining the order.

”The restraining order is not envisaged to have any material financial and operational impact to the Barakah group. Further development on the above matter will be announced to Bursa Malaysia Securities Bhd in due course.”

Last May, Barakah’s independent auditors Messrs Crowe Horwath raised concerns over its ability to continue as going concern due to the losses and borrowings ended Dec 31, 2017.

It incurred a net loss of RM216.75 million and negative cash flow of RM71.83 million as at end-December 2017, while fixed deposits stood at RM102.71 million.

Barakah shares were unchanged at 12.5 sen today before a suspension in the afternoon session.

Harris, L3 merging to form US technology giant

WASHINGTON, Oct 15 — Harris and L3 Technologies, two American companies specialising in military communications and technology, announced their merger yesterday, giving birth to a giant in the sector. The merger “of equals” will be achieved…

James Murdoch in line to replace Musk as Tesla chairman, reports FT

LONDON, Oct 11 — Outgoing Twenty-First Century Fox Inc Chief Executive James Murdoch is the lead candidate to replace Elon Musk as Tesla Inc chairman, the Financial Times reported yesterday, citing two people briefed on the discussions. Tesla has…

Affordable homes pipeline expands, deals in property market flat

PETALING JAYA: Malaysian property developers are launching more residential units that are priced RM500,000 and below, but judging from the Real Estate and Housing Developers' Association Malaysia's (Rehda) Property Industry Survey 1H 2018, it has done little to move transaction numbers.

The survey revealed that 65% of residential units launched in 1H 2018 were priced at RM500,000 and below, which is a steady increase from 52% in 2H 2017 and 44% in 1H 2017.

For the property market as a whole, however, transactions for the period hardly budged despite fewer units on offer, with only 6,764 units sold, compared with 6,760 units in 2H 2017. Some 13,233 units (residential and commercial) were launched in the first half of the year, compared with 15,082 units in 2H 2017.

Of the 6,764 units sold, two- and three-storey terraces were the most popular with 2,858 units sold compared with 2,779 units sold in 2H 2017. The second most popular type of property sold was apartment/condominium with 2,047 units sold in 1H 2018, compared with 753 units sold in 2H 2017.

Rehda president Datuk Soam Heng Choon said the 12,522 units of homes launched in 1H 2018 were priced from RM100,001 to RM700,000, as developers are adjusting the type of properties they plan to launch.

“We hope the worst is over. If you look at the government's call for us to launch affordable houses, you can see that the units going up are below RM500,000. We are aligning our business to what the buyer wants and what they can afford,” Soam told reporters at a briefing today.

According to the survey, 47% of the 152 respondents had affordable housing (houses priced between RM100,000 and RM500,000) components in their developments in 1H 2018 while the bulk of future launches in 2H 2018 were priced at RM500,000 and below, with launches priced up to RM700,000 in Penang and Selangor.

For 2H 2018, 47% of respondents plan to launch 15,852 units comprising 8,991 strata units, 6,433 landed homes and 428 commercial units. About 66% of respondents anticipate take-up rates of 50% or less, for the first six months after launching.

Meanwhile on the overhang in the market, the survey revealed that in 1H 2018, 75% of respondents reported having unsold stock, with the majority having up to 30% unsold stock.

Soam said the unsold units are a result of loan rejection, buyers being offered lower margin of financing and unreleased bumiputra units.

“For unsold bumiputra units, Penang and Selangor have an auto-release mechanism. We appeal to all other states to seriously look at this,” he said, adding that the condition of unsold units will deteriorate over time, making them harder to sell later.

Soam said compliance cost, which can be 15% to 20% of total cost, remained a significant factor affecting developers' cash flow. He said lower compliance cost would directly reduce house prices.

Soam said lower compliance cost would have a much bigger impact on house prices than the sales and service tax exemption on construction services.

Rehda members said the top three incentives to encourage provision of affordable housing are lower development charges, lower land conversion premium and exemption of capital contribution.

On Maybank Kim Eng Research senior economist Chua Hak Bin's suggestion to raise property stamp duty on foreigners, Soam questioned the impact of such a move as they make up only 3% of property buyers in Malaysia.

Developers of affordable housing may enjoy lower compliance costs by 2019

PETALING JAYA: Developers of affordable housing are expected to see a reduction in their compliance costs by 2019, including for utility, water and telecommunications, if the affordable housing policy is approved by the Cabinet.
Housing and Local Government Minister Zuraida Kamaruddin wants utility companies to construct their own utility base in the housing areas and other agencies their own amenities so that it reduces the cost for developers.
“At the ministerial level, principally, they (the respective ministries) have agreed to take up the costs,” she told reporters at the Housing Conference 2018 organised by Rehda Institute today.

Zuraida said her ministry has proposed that prices of affordable houses be capped at RM500,000, depending on the location and the median income of the people in the area, but noted that the units should be bigger at over 850 sq ft, from 650 sq ft previously, with facilities.

Currently, developers bear the cost of constructing the Tenaga Nasional Bhd (TNB) substation in a particular housing area.

She said different states will have to comply with the propodrf ew rule and the Housing and Local Government Ministry will ensure that it is in line with the federal government's policy.

Zuraida said the high cost of houses is a result of the imposition of premiums to land, development cost and compliance cost. Land and compliance cost make up about 25% of the overall cost of the house. The ministry wants to reduce the cost of development for developers so that house prices can be lowered.

“By 2019, the new housing concept will have this cost reduction (if approved). The (compliance) cost will not be imposed on affordable housing developers.”

Rehda Institute chairman Datuk Jeffrey Ng Tiong Lip said over the years corporatised public utility companies have loaded the infrastructure costs onto developers, and if they can bear their own infrastructure costs, it is one sure way that development cost will come down.

Rehda Malaysia deputy president Khor Chap Jen opined that private utility companies such as Syarikat Bekalan Air Selangor Sdn Bhd, Indah Water Konsortium Sdn Bhd, TNB and Telekom Malaysia Bhd should not be imposing capital contribution charges on developers as they are already required to lay infrastructure and bring in new customers to utility companies.

“These utility companies should revise their own capital to be recovered via tariff based on consumption or through federal funding from general taxation.
“Similarly, requirements for huge amounts of deposits should be reviewed as such deposits are adversely impacting project cash flow of small, medium and bigger sized developers alike. The impact is especially felt more severely by the bigger player as they undertake projects with bigger gross development value and they may have many ongoing projects at any particular time,” said Khor.

He added that these resources could have been productively and efficiently utilised for new investments instead.

“While many are advocating that construction technology such as the Industrialised Building Systems can help reduce cost, input costs which have been on the rise in recent years must also be looked at. Ideally, the overall costs of doing business must be lowered to facilitate the supply of more houses.”