TA Global expands working capital
Developer allocates RM152mil for projects in Malaysia and Australia
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.