UEM Sunrise to use prudent measures to weather tough times
THE Covid-19 pandemic and movement control order (MCO) has brought about a “new normal” for the country, and it is here to stay for the foreseeable future.
The property sector, which is an integral component of the economy, is set to have a tough time navigating this new normal.
UEM Sunrise Bhd managing director and CEO Anwar Syahrin Abdul Ajib anticipates that it will take about 12 to 18 months from the lifting of the MCO to see some 70% to 80% of the pre-covid-19 environment.
As such, the property developer has braced itself to take on the headwinds posed by the pandemic, through prudent financial management, a digital-first focus as well as a re-strategy in marketing and operations.
For starters, UEM Sunrise will continue to practise measures to prevent the spread of Covid-19, even with the lifting of the MCO.
The group had prepared its Business Continuity Planning (BCP) weeks prior to the start of the MCO and was ready to activate split operations and an across-the-board work from home policy.
“We may still split our operations in the office, impose a ban on business travel and have other standard operating procedures (SOPS) at the office or our development sites.
“We think we can continue to adopt some of the practices we are implementing at the moment, such as video conferencing and e-documents.
“If there are cost savings and improves efficiency, why not?” says Anwar Syahrin.
Apart from that, the company needs to ensure that it has the financial muscle to weather the storm with minimal damage. “It is vital that we allocate enough buffer in our budgets to sustain our operations while waiting for the market to start recovering from such a major shock.
“Hence, discipline in managing our finances is key,” Anwar Syahrin tells Starbizweek.
Given the delay in delivery dates of the group’s projects due to the MCO, UEM Sunrise is hoping that there will be financial exemptions, given the uniqueness of the current crisis.
“We will be informing our customers first accordingly when we have better clarity on the completion dates due to the MCO,” he says.
As at end-financial year 2019 (FY19), UEM Sunrise’s balance sheet remained strong, with a low gross gearing of 0.46 times and a net gearing of 0.32 times, as well as sufficient landbank to be used as collateral for future borrowings.
As for land divestment, the group is still pursuing that and hopes to close a few deals over the next 18 months. Additionally, the group has a healthy cash position of Rm1.057bil.
“We are in a comfortable position to borrow more if we need to but responsible borrowing is important.
“We will be prudent in our spending and conserve cash where appropriate to ensure liquidity to sustain the company during this uncertain time.
“Above all, we need to be cautious of our actions during this trying time,” says Anwar Syahrin.
UEM Sunrise also has a reasonable amount of untapped facilities with an unutilised sukuk balance of Rm1.2bil as at end-fy19, which is expected to provide adequate funding, along with unbilled sales of Rm1.8bil, which should sustain earnings for the next one to one-and-a-half years.
As for future project launches, UEM Sunrise is deliberating postponing some of them, as the group keeps a close eye on prevailing market conditions.
This will undoubtedly have a bearing on its sales targets.
“Although there are sales targets that we aspire to achieve, it is important to focus on the well-being of Malaysians during these tough times.
“We must understand what their priorities are, which may or may not include purchasing property. If securing a property for their future is still important to them, then we want to make sure that we make it seamless and easy for them to do so,” he elaborates.
Hence, UEM Sunrise will have to look at new ways to engage with its customers, given the new way of doing business, where the group can no longer rely on customers walking into sales galleries or attending activation events.
“Although we are in unprecedented times of being in a partial lockdown, this also means that people will have the time to consume more media and respond immediately, should our messages hit the mark and pique their interest.
“For that, we focus on channels which are more pertinent at times like these such as radio, social media and online news platforms -- communicating our marketing campaigns and continuing to reach out to prospects using exciting promotions with attractive rebates and prizes and facilitating easy entry,” he says.
Bank Negara recently projected a gross domestic product (GDP) growth of between -2% and 0.5% for 2020.
This does not bode well for the property sector, of which sentiment was already soft.
“The property sector is important for the recovery of the economy, as it impacts about 150 business activities along the upstream and downstream value chain.
“It is also a key indicator and bellwether of consumer and business confidence through property sales growth and mortgage approvals.
“A resilient property industry will ensure market liquidity, quicker churn will uplift the construction sector, and thriving investor markets will ensure a healthy rental economy,” says Anwar Syahrin.
In the long-term, bolstering consumer sentiment is key.
However, he notes that market incentives to boost the economy will be futile without policy certainty.
“Specifically, there needs to be continuity in commitment to catalytic projects so that they attract investment opportunities and high-income jobs sustainably.
“What is important in moving forward for us is to take the lessons we have learnt and use it to achieve our vision of building communities of the future,” he says.