Ireka expects boost from property division in FY21

In FY20, the developer’s property segment more than doubled to RM83m compared to RM38m in the previous year

by SHAHEERA AZNAM SHAH / pic by ARIF KARTONO

IREKA Corp Bhd is expecting to increase the revenue contribution of its property division to 50% from the current 30% by the end of its financial year 2021 (FY21) driven by its unsold units.

Its group MD Datuk Lai Voon Hon said its current financial year is leveraging on the sales of three of its projects — KaMi Mont Kiara, Kuala Lumpur (KL), [email protected] Rimbun Kasia in Nilai, Negri Sembilan and Asta Enterprise Park in Kajang, Selangor, which are expected to be its major contributors.

“We expect the property division will help to improve our result in this current financial year as the recognition from its operating profit will be quite strong compared to other segments.

“The ratio between the construction and property segments last financial year was about 70% to 30%, with the latter being from the property,” he said in a press briefing in KL yesterday.

Currently, the take-up rate for Ireka’s KaMi Mont Kiara, which comprises 168 residential units, stood at 95% sales, as its construction progress will advance to next year, Lai said.

Demand for [email protected] Kasia, which has been 60% sold at the moment, has been encouraging during the post-Movement Control Order (MCO) period due to the low-interest-rate environment and is expected to reach 80% by year-end, he added.

In FY20, Ireka’s property segment more than doubled to RM82.7 million compared to RM38.1 million in the previous year.

The increase in the real estate segment was mainly contributed by the sales from KaMi Mont Kiara, which represented 42.6% of its total property revenue.

For its next financial year, Lai said the group expects to launch two new developments — a high-rise and a townhouse project aimed at the mid-market range.

“The residential demand is very soft at the moment to launch a new development. We expect the market will likely recover in the middle of next year and beyond and maybe there is an opportunity for us then,” Lai said.

For its construction segment, Ireka expects the segment to benefit from the government fiscal injection through Budget 2021 and the 12th Malaysia Plan.

“The construction sector has been our core business as we have been tendering for projects such as the East Coast Rail Link and government hospital projects.

“I’m confident the government will continue supporting infrastructure projects as the construction sector has the highest multiplier effect on the economy.

“We are cautiously confident the sector will rebound next year, it could not bottom further any more than this should the Covid-19 cases subside,” he said.

At present, Ireka’s orderbook stood at RM320 million, which is expected to last for 15 months.

On Ireka’s demerger proposition with Aseana Properties Ltd, group deputy MD Monica Lai (picture) said the exercise is expected to receive approval from the regulatory bodies by the end of this year.

“We already submitted the proposal to Bursa Malaysia and Securities Commission Malaysia (SC). The demerger is a significant exercise because we are disposing of our shareholding in Aseana Properties. SC and Bursa need to look and approve the circular so we can hold an EGM for the exercise and we hope to get it out there by the end of October,” she added.

Ireka signed definitive agreements with London Stock Exchange-listed Aseana Properties earlier this year to undertake the demerger exercise which involves separating Ireka’s 23% shareholding from Aseana.

The exercise will see the acquisition of Ireka’s shares in Aseana Properties by the latter in exchange for the distribution of certain assets owned by Aseana comprising the RuMa Hotel and Residences in Kuala Lumpur and a plot of the land in Kota Kinabalu, Sabah.

Monica said the group is planning to develop a senior living resort on the 80-acre (32.37ha) land in Sabah as part of the group’s plan to venture into a hospitality segment.

“The land is a beachfront area in Kota Kinabalu and we have plans to develop a senior living resort.

“We are currently working on the details as at the moment the land does not belong to us yet. It is one of the areas which Ireka is keen to embark on. We believe it is still an underserved senior living resort,” he said.

The demerger is part of Ireka’s corporate strategy to shift its management effort on focusing on its four core businesses, property, construction, information technology and urban transportation.