Glomac earnings up on robust development activities

Glomac Bhd posted a higher net profit of RM9.3mil in its second quarter ended Oct 3 against RM7.7mil in the previous corresponding period.
Revenue for the period was lower by 17% at RM75.6mil compared with RM91mil previously partly due to the completion of its Suria Stonor condominium project, the company said in a statement yesterday.
Earnings per share stood at 3.26 sen compared with 2.74 sen before.
Group executive chairman Tan Sri F.D. Mansor said: “Robust development activities and a strengthened balance sheet have placed us on a stronger growth platform.
“We are confident of achieving better results this year, and success in our new projects such as Glomac Damansara and Glomac Cyberjaya will contribute positively to our performance in the next two financial years.”
The group turned in a net cash position of RM19.9mil as at end-October, and is expected to improve further with proceeds from the disposal of its investment properties earlier in the year.
“Going forward, our recent acquisition of 7.6 acres in Petaling Jaya for RM31.2mil will add to the group’s already strong prime future development projects,” he added.

LCL skids on investor jitters

Shares in interior design firm LCL Corp Bhd plunged yesterday to their lowest level post-listing in 2004 as worried investors dumped the stock on concern it may face bankruptcy because of the Dubai financial crisis.
On Thursday, LCL said it did not pay loans amounting to RM72mil and was facing further defaults.
The company said it was “deliberating the solvency status of the group’’ and would make further announcements within the required timeframe.
“This news is a major de-rating catalyst, along with worsening news flow and continuing collection problems in Dubai,’’ CIMB Research said yesterday.
“The company offered so much potential, but its operations and balance sheet were hit hard after working conditions in Dubai deteriorated in the aftermath of the property crash in the fourth quarter of 2008,’’ it said.
LCL shares tumbled 10 sen, or 31%, to 22 sen on heavy volume of 41.4 million units.
On Thursday, the company told Bursa Malaysia that it had been “severely impacted” by the financial turmoil in Dubai, where property prices have collapsed resulting in delay and non-payment of its receivables.
“Hence, LCL and its subsidiaries have been unable to meet their repayment obligations,’’ the company said.
As at end-September, LCL’s total debt stood at RM376mil. Most of the loans are short-term financing and almost all of its borrowings were intended for working capital.
The group said it had defaulted on loans worth RM69.4mil due to Affin Bank Bhd and RM2.6mil to Bank Islam Malaysia Bhd.
LCL said due to the overall tight working capital position, the defaulted credit facilities would have a consequence on the group’s bank borrowings, which would also be declared default by other banks under the cross-default clause.
Other lenders used by LCL with cross-default terms include AmBank Bhd, Alliance Bank Malaysia Bhd, Bank Muamalat Malaysia Bhd, EON Bank Bhd, CIMB Investment Bank, Exim Bank, Kuwait Finance House (M) Bhd, Public Bank Bhd, Standard Chartered Bank Malaysia Bhd and Royal Bank of Scotland Group Plc.
LCL had borrowed money from the banks to fund its aggressive expansion, but the group’s venture in Dubai had soured.
“The challenges are not only hitting LCL, but also the main contractors in Dubai, including (South) Korean and Japanese contractors,’’ CIMB Research said.

SUNWAY HOLDINGS BERHAD

LETTER OF AWARD FOR RM23.438 MILLION FROM DAMANSARA ASSETS SDN BHD

Sunway Geotechnics (M) Sdn Bhd, a wholly-owned subsidiary of Sunway Construction Sdn Bhd, which in turn is a wholly-owned subsidiary of Sunway, had on 2 December 2009, accepted the letter of award for a contract worth RM23.438 million from Damansara Assets Sdn Bhd for piling and substructure works (Phase B & C) on Lot 14530, Jalan Tun Abdul Razak, Johor Bahru.

The Proposed Project is targeted to be fully completed on 31 May 2010 with a construction period of 6 months.

The Proposed Project is subject to certain risks in the property and construction sector in Malaysia. These include changes in general economic conditions such as but not limited to inflation, taxation, interest rates, constraints in labour and material supply. The experience and expertise that Sunway Construction Sdn Bhd and Sunway Geotechnics (M) Sdn Bhd have in construction projects in Malaysia provide assurance in mitigating the execution risks.

WCT gets RM363mil job from MAHB

WCT Bhd has received a RM363mil contract from Malaysia Airports Holdings Bhd under the proposed building of a new low-cost carrier terminal at the KL International Airport.
WCT told Bursa Malaysia yesterday the scope of works under the contract comprised site preparation, earthworks and main drainage which were expected to be completed on Jan 1, 2011.
“The contract is not expected to have any material impact on the earnings and net assets of WCT group for the current financial year ending Dec 31, 2009 but is expected to contribute positively to the group’s future earnings and net assets,” it said.

Mah Sing plans mixed property project in China

It will establish a JV firm to undertake the US$620mil development

Property developer Mah Sing Group Bhd is planning a mixed development project in Wujin, Jiangsu province in China, with an estimated investment cost of US$620mil.
The company, via wholly-owned subsidiary Mah Sing International (HK) Ltd, yesterday signed a letter of intent with the Wujin Government to develop the said project.
In a statement yesterday, Mah Sing said it would establish a joint-venture (JV) company with China-based developer DanLong Realty (Beijing) Co to jointly develop a 87.31-acre site along Wuyi Road, a major thoroughfare in the central area of the Wujin district.
Mah Sing, which would have a 51% stake in the JV company, said the development would comprise “medium- to high-end residential and commercial components.”
The Wujin Government had also given the JV company the opportunity to explore additional land, namely 53.13 acres north of Wujin High-New Zone of Zhangzhou City and 82.37 acres at the north intersection of Wunan Road and Wuyi Road, Wujin District, it said.
Mah Sing group managing director-cum-group executive Tan Sri Leong Hoy Kum said in the statement: “We are confident of creating an outstanding development providing unique lifestyle experiences which will transform the way people live, work and play in Wujin.”
In a separate statement, Mah Sing said it had acquired 3.38 acres of freehold land in Penang for a cash consideration of RM38.65mil via its wholly-owned subsidiary, Klassik Tropika Sdn Bhd.
Mah Sing said the land in George Town would be developed into a high-end condominium with an estimated gross development value of RM280mil.
“The acquisition is strategic as it allows the group to tap on the success and spillover demand of Mah Sing’s Residence@Southbay project in Batu Maung,” Mah Sing said.

Salcon expands water concessions to Yizheng municipality

SALCON BHD signed a cooperation agreement yesterday with the local government of Yizheng City in Jiangsu province, China on water and wastewater integration projects in the city and its neighbourhoods.In a statement yesterday, Salcon said the water and wastewater works include planning, operation and maintenance, laying of pipe networks, management of wastewater and recycled water within the Yizheng City administrative area.Further to the cooperation agreement, Salcon said an agreement (JVA) had been signed by its wholly-owned Salcon Jiangsu (HK) Ltd and Yizheng City & Rural Water Co Ltd to incorporate a joint venture company known as Jiangsu Salcon Water Environment Development Co Ltd (JSWED)The registered capital of JSWED would be 60 million yuan (approximately RM29.78 million) with Salcon Jiangsu subscribing for two-thirds of the equity stake and Yizheng Rural Water a third. It noted that under the JV agreement, JSWED would undertake the integration of water and wastewater supply works in Yizheng City, production of potable water, operation of wastewater and recycled water treatment and the discharge of rainwater and wastewater.

Impact from devaluation of dong quite small for Malaysian firms

Malaysian construction companies on the stock market continued to be affected by the devaluation of the Vietnamese dong yesterday but analysts said the outlook of the economy is still attractive for investors.
“The impact from the devaluation is quite small for Malaysian companies,’’ said Pong Teng Siew, head of research at Jupiter Securities.
Vietnam devalued the dong by 5.4% against the US dollar late last week, the first time since December last year, as a means to deal with high inflation and a trade deficit. The country also raised its interest rate to 8% from 7%.
A number of construction companies, already reeling from the fallout from the Dubai debt problem, were hurt when news of Vietnam’s action broke.

Gamuda Bhd, WCT Bhd and SP Setia Bhd, which have large projects in Vietnam, took a hit but Gamuda bounced back slightly yesterday after taking a beating last week, closing up five sen to RM2.80. WCT was down eight sen to RM2.44 and SP Setia was 19 sen lower at RM3.51.
“Shakier economic fundamentals in Vietnam have a mild near-term impact on Malaysian companies’ initial investments, but could delay property launches,’’ UOBKayHian said in a note yesterday.
“A weaker dong and a potential further interest rate hike could temporarily dampen property market sentiment, but the longer-term prospects are still good, underpinned by the global economic recovery and Vietnam’s sizeable young population,’’ it said.
Analyst reports indicated that demand for property in Vietnam was still robust as checks with local steel companies showed demand for steel was increasing.

Other companies with construction and property exposure to Vietnam include Berjaya Land Bhd.
“We do not expect Vietnam to contribute significantly to both Gamuda and WCT’s earnings over the next one year or so,” AmResearch said in a note. “In any case, the dong has already depreciated by some 12% against the ringgit prior to the latest round of devaluation.’’
Analysts also do not think other Asian countries would mirror the action of Vietnam given that inflation and trade deficits are not prevalent in many of the countries.

Sin City pinning biggest ever bet, US$8.5b

Sin City is pinning its biggest bet ever - US$8.5 billion - on a 67-acre (27-hectare), six-tower complex of striking hotels, gourmet restaurants, swank shops and a single casino that starts opening Tuesday in the heart of the Las Vegas Strip.
Many watching the high-stakes roll of the dice shudder at the thought that nearly 5,900 rooms in three hotels will be awaiting guests when CityCenter's crown jewel - the 4,004-room Aria Resort & Casino - opens Dec. 16.
That will increase Las Vegas' already saturated inventory by more than 4 percent at a time when fewer visitors are coming and room prices have fallen 25 percent from last year.
CityCenter's debut might pull rates even lower, but state leaders hope the complex leads Nevada out of two years of economic misery that has hit the state with record unemployment, foreclosures and bankruptcies.