TA Global ex­pands work­ing cap­i­tal

De­vel­oper al­lo­cates RM152mil for projects in Malaysia and Aus­tralia

The Star Malaysia - StarBiz - - Companies & Strategies - By EU­GENE MAHALINGAM eu­genicz@thes­tar.com.my

Salient points IN a bid to re­strate­gise its prop­erty ventures, TA Global Bhd has an­nounced that it is more than dou­bling work­ing cap­i­tal for its on­go­ing de­vel­op­ment projects – all within the short span of two short months.

In a fil­ing with Bursa Malaysia on Mon­day, the prop­erty de­vel­oper said it will be util­is­ing RM152.21mil in work­ing cap­i­tal pro­ceeds for on­go­ing prop­erty de­vel­op­ments in Malaysia and Aus­tralia.

This com­pared to an an­nounce­ment it made on Aug 9 – when the com­pany said it was only al­lo­cat­ing RM67.93mil for the same ob­jec­tive.

In its note on Mon­day, TA Global said it would be al­lo­cat­ing RM107.21mil and RM45mil for on­go­ing de­vel­op­ments in Aus­tralia and Malaysia re­spec­tively.

“The in­crease in the work­ing cap­i­tal al­lo­ca­tion in­di­cates that the com­pany is op­ti­mistic about the po­ten­tial of its projects go­ing for­ward - in spite of the cur­rent prop­erty mar­ket sit­u­a­tion,” says an an­a­lyst.

“The prop­erty mar­ket is cycli­cal and won’t stay down for­ever. It’s good to plough in cash now... and reap the ben­e­fits when the seg­ment picks up later,” he adds.

The boost in work­ing cap­i­tal comes fol­low­ing its an­nounce­ment on Mon­day to scrap its ini­tial plans (that it an­nounced on Aug 9) to utilise A$100mil (RM328mil) to ac­quire ei­ther prop­er­ties, as­sets or busi­ness, and in­stead to use A$180mil (RM595.62mil) to re­pay bank bor­row­ings within six months.

For its Aus­tralian de­vel­op­ments, TA Global says the sum of RM107.21mil would be for the de­vel­op­ment of 179 units of high-end apart­ments un­der the Il­lume project, sit­u­ated on de­vel­op­ment lot six.

TA Global says the work­ing cap­i­tal sum would be to fund the de­vel­op­ment cost com­pris­ing of build­ing and in­fra­struc­ture works, pro­fes­sional fees, au­thor­i­ties’ fees, goods and ser­vices tax (GST), as well as other re­lated con­struc­tion and de­vel­op­ment cost payable from time to time to com­plete the con­struc- tion and de­liv­ery of the units.

Based on the sales con­tract for the project, the apart­ment units are to be com­pleted by the first quar­ter of 2019.

Back in Au­gust, TA Global en­tered into a put and call op­tion with Karim­bla Prop­er­ties Pty Ltd to dis­pose of the Lit­tle Bay Cove project.

The project is a 33.6-acre free­hold res­i­den­tial de­vel­op­ment master plan lo­cated to­wards the south­ern end of the Eastern Sub­urbs in the sub­urb of Lit­tle Bay Cove, just south of Mal­abar in New South Wales, Aus­tralia.

Lit­tle Bay Cove is con­sid­ered one of Syd­ney’s land­mark life­style res­i­den­tial de­vel­op­ments, to be de­liv­ered in stages over the next sev­eral years.

Aus­tralian prop­erty prices con­tinue to soar, with an­a­lysts warn­ing that the mar­ket there has peaked, while the prop­erty mar­ket in Malaysia re­mains soft.

In July, re­searchers at the Swiss bank, UBS warned that the Aus­tralian hous­ing mar­ket has peaked and could crash if the coun­try’s cen­tral bank raises rates by too much or too quickly.

Prop­erty in Aus­tralia has boomed, with re­cent gov­ern­ment data mark­ing growth in res­i­den­tial prop­erty prices at 10.2% year on year dur­ing the first quar­ter of 2017.

CNBC quoted UBS Econ­o­mist Ge­orge Thare­nou as say­ing that any rash in­ter­est rate ac­tion from the Re­serve Bank of Aus­tralia could trig­ger a crash.

StarBizWeek re­ported in Au­gust that the group had no plans to “slow down or stop rolling out projects” just be­cause of slow­ing mar­ket con­di­tions.

“It will have to take its nat­u­ral course, and we need to be ready when it picks up,” the re­port said, quot­ing TA Global ex­ec­u­tive di­rec­tor Kimmy Khoo.

“These projects have a long ges­ta­tion pe­riod, so we re­main con­fi­dent about their prospects,” she says.

On plans for its Malaysian de­vel­op­ments, the pro­posed work­ing cap­i­tal of RM45mil will be for a mixed de­vel­op­ment known as TA3 & 4 (com­pris­ing a 480-key ho­tel and 308 ser­viced apart­ments within two tower blocks) in Kuala Lumpur City Cen­tre; mixed-de­vel­op­ment project known as Ativo Suites in Da­mansara Av­enue (com­pris­ing 668 ser­viced res­i­dences within two tower blocks with re­tail shops at the podium) in Pe­tal­ing Jaya; and a res­i­den­tial project (com­pris­ing 364 units within two con­do­minium blocks) in Du­ta­mas, Pe­tal­ing Jaya.

In its an­nual re­port, the group said it has 750 acres of land bank both lo­cally and in­ter­na­tion­ally un­der its prop­erty de­vel­op­ment di­vi­sion, which it would grad­u­ally de­velop into res­i­den­tial, com­mer­cial or mixed de­vel­op­ment.

Of the 750 acres, 185.92 acres are in plan­ning and de­vel­op­ment stages and its ex­pected to­tal gross de­vel­op­ment value is RM15.1bil.

In Malaysia, the prop­erty de­vel­oper has carved a name for it­self as a niche lux­ury life­style real es­tate com­pany through its suc­cess­ful launches of Da­mansara Av­enue, Da­mansara Idaman, Idaman Vil­las and Idaman Res­i­dence projects.

For its sec­ond quar­ter ended June 30, 2017, TA Global recorded a net profit of RM30.07mil com­pared with a net loss of RM9.73mil in the pre­vi­ous cor­re­spond­ing pe­riod, mainly at­trib­ut­able to bet­ter con­tri­bu­tion from fi­nance and re­lated ser­vices, prop­erty de­vel­op­ment and ho­tel op­er­a­tion di­vi­sions.

Rev­enue in the sec­ond quar­ter in­creased to RM225.69mil com­pared with RM122.90mil a year ear­lier.

For the six-month pe­riod ended June 30, the com­pany reg­is­tered a net profit of RM94.49mil, com­pared with a net loss of RM9.19mil in the pre­vi­ous cor­re­spond­ing pe­riod.

Rev­enue im­proved to RM462.93mil from RM280.68mil a year ear­lier.

Khoo: These projects have a long ges­ta­tion pe­riod, so we re­main con­fi­dent about their prospects.

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