MGB to focus on affordable houses via JVs with land owners

MGB Bhd aims to play the role of a core developer of affordable houses on the back of several joint ventures (JV) or development right agreements entered into recently with land owners.

The group’s indirect subsidiary Multi Court Developers Sdn Bhd will be developing 118 units of double-storey terraced house in Batu Pahat, Johor in a JV with LBS Bina Group Bhd.

The development land is situated within Laman Bayu, located at the west of Bandar Putera Indah township, just 7km from Batu Pahat town centre and 17km from Yong Peng toll.

The expected gross development value (GDV) of the JV project is about RM45.65 million, MGB said in a filing with Bursa Malaysia.

MGB said that the proposed development is targeted to sell at an average price of RM387,000 per unit.

According to MGB, the latest completed development around the development land known as “Genting Pura Kencana” is selling their double-storey terrace houses from RM400,000.

Laman Bayu is a project by Multi Court and the development land is owned by LBS Bina’s unit, LBS Bina Holdings Sdn Bhd.

MGB said that LBS Bina Holdings will be entitled to a guaranteed sum totalling RM5.5 million as the landowner entitlement.

Multi Court is currently developing 365 units of double-storey terrace houses in Laman Bayu, which has a GDV of RM93.5 million.

The project’s phase 1 and phase 2 have achieved 100 per cent and 87.4 per cent sales.

The group thinks that it would be wise to develop properties in the same area where it already has a strong presence.

MGB said the group’s supply of precast concrete panels is expected to reduce the time and labour cost in the development project (and future projects) and this will eventually enhance its profitability.

The group’s property development segment registered revenue of RM31.22 million and pre-tax profit of RM4.87 million in the current financial period as compared to RM28.51 million and RM2.77 million respectively in the preceding year corresponding quarter. This represented a growth of about 9.51 per cent and 75.81 per cent respectively.

Higher revenue and pre-tax profit were derived from the Laman Bayu project in the current financial period as compared to the previous year’s corresponding period.

As at March 31, 2020, Laman Bayu sold 206 units (March 31, 2019: 67 units) with a value of RM74.3 million (March 31, 2019: RM24 million).

MGB said, the group’s maiden project Zenopy Residences had also contributed a pre-tax profit of about RM2.42 million to the property development segment with 99 per cent units sold.

“The group is cautiously optimistic that the group will perform satisfactorily in the year 2020,” it said.

Last month MGB said its indirect wholly-owned subsidiary Prisma Kasturi Sdn Bhd had entered into 63 separate sales and purchase agreement (SPAs) with AZ Avenue Sdn Bhd (AZASB) to dispose of 60 apartment units and three shop lots in Cameron Highlands, Pahang for RM28.7 million.

MGB said the disposal price represents a premium of about 1.7 per cent to the market value (RM28.22 million) appraised.

It said the proposed disposal will unlock and realise the value of its non-core assets and contribute positively to the group’s overall cash flow as well as its financial position, liquidity, and gearing.

“The proceeds will be first utilised to repay the bank borrowing that financed the properties,” it said.

There will be a one-off gain on disposal of about RM1.69 million for the financial year ending December 31, 2020.

Source: NST