Slower property sales with expected liquidity squeeze

Berjaya Land Bhd (BLand) says the property development business segment is expected to be impacted by slower property sales mainly due to the expected liquidity squeeze arising from the contraction of the economy in the short term.

The developer expects its leisure segment to also be impacted by the occurrence of second and third Covid-19 waves.

“The tourism industry was about to kickstart its recovery with domestic tourism after the initial lifting of domestic travel restrictions although international travels are still restricted. However, the second and third Covid-19 waves have again dampened the recovery rate of the tourism industry.

“As such, (BLand) directors expect the occupancy rates and the revenue from events at the hotels, resorts, clubs, and recreation business segments to remain low,” it said in a filing with Bursa Malaysia yesterday.

BLand said taking into account all the aforesaid, the directors expect the performance of the group’s business operations for the remaining quarters of the financial year ending June 30, 2021, to remain challenging.

The group registered revenue of RM1.46 billion and pre-tax profit of RM23 million in the first quarter (Q1) ended September 30, 2020, as compared to revenue of RM1.58 billion and pre-tax profit of RM81.52 million reported in the previous year corresponding quarter.

It said there were lower property progress billings reported by the property development and investment business segment, coupled with lower revenue from the hotel and resorts business segment which were adversely affected by the international border closures and travel restrictions.

The hotel and resorts business segment reported significantly low average occupancy rates for the current quarter as compared to the previous year’s corresponding quarter, it said.

BLand’s pre-tax profit fell sharply in the current quarter under review mainly due to lower revenue reported by all business segments, including gaming operated by Sports Toto Malaysia Sdn Bhd.

In addition, there was a higher share of losses from the group’s associated companies particularly from Berjaya Kyoto Development (S) Pte Ltd group which reported lower occupancy rates due to the Covid-19 pandemic lockdown.

BLand said the adverse impact from the above factors was mitigated by the recognition of the gain on disposal of Berjaya Jeju Resort Ltd, amounting to about RM65 million, following the completion of the JDC Lawsuit settlement on August 28, 2020.

Major improvement in Q1, 2020, versus Q4, 2019

BLand’s RM1.46 billion revenue and pre-tax profit of RM23 million reported in Q1, 2020, was a major improvement as compared to the preceding quarter’s revenue of RM541.58 million and pre-tax loss of RM144.62 million.

In the preceding quarter ended June 30, 2020 (Q4, 2019), the group’s businesses were temporarily closed for various periods of time due to the Covid-19 pandemic lockdowns in the countries where the group operates.

Starting July BLand’s business segments resumed operations and this led to the higher revenue reported by the group.

BLand’s said the lifting of domestic travel restrictions has boosted the revenue of the hotels and resorts business segment, particularly The Taaras Beach & Spa Resort at Pulau Redang.

In the preceding quarter, the property development and investment business segment had completed two residential projects, The Lanai, an affordable housing at Bukit Jalil, Kuala Lumpur and Kensington Gardens, Penang, BLand said.

Kensington Gardens is the first parcel for Jesselton Villas, which is being developed on 23.9ha of prime land located in Penang Turf Club.

It comprises 69 bungalow lots with built-ups of between 5,995 and 9,634 sq ft, and has a gross development value of RM318 million.

Source: NST