What Is Muar Ban Lee’s Interpretation Of Symphony Life?

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THE APPARENT discord between Symphony Life Bhd’s (SLB) directors and shareholders since Muar Ban Lee Group Bhd (MBL) became a significant shareholder in April has raised quite a few eyebrows recently.

Previously known as Bolton Sdn Bhd, SLB is one of Malaysia’s oldest property developers. It began as Bolton Properties Ltd in 1964 and was listed on the Kuala Lumpur Stock Exchange (now Bursa Malaysia) in 1973. In 2013, the company changed its name to SLB.

MBL, on the other hand, is a family-owned palm kernel expeller manufacturer formed in 1987 with a focus on palm oil and oil seed crushing machinery.

MBL was instrumental in successfully opposing the powerful Jardines company of Hong Kong’s privatisation of Cycle & Carriage Bintang Sdn Bhd last year.

Given the two firms’ distinct business sectors, one has to wonder what value MBL places on SLB.

SLB’s 2021 annual report, which was published on Bursa Malaysia on Aug 30, stated that the business had survived various economic downturns and delivered over 20,000 residences around the country.

Currently, it is working on two projects: Kejora Industrial Park phase 3 in Kedah and Union Suites @ Bandar Sunway in Selangor. Additionally, the business has 11 projects in the pipeline, including three in Kedah, three in Kuala Lumpur, and one in Selangor, as well as one in Sabah and one in Kelantan.

Datuk Jasmy Ismail notes in his chairman’s statement that the Covid-19 pandemic and different forms of lockdown continue to dampen buyer interest for property, but pent-up demand remains robust.

He emphasises the importance of developers supplying the most relevant items to the appropriate target group at the proper pricing and place.

“Our initiatives include a stronger emphasis on addressing genuine market demand, which entails supplying houses priced at or below RM500,000. The corporation will use the Houzkey concept in conjunction with its ‘Live It Own It’ programme to increase property sales,” Jasmy writes.

Additionally, he emphasises that technology will act as a catalyst and facilitator for SLB’s ongoing transformation into a more dynamic, empowered organisation that is adaptable and nimble enough to respond to today’s new normal and highly dynamic environment.

According to the Management Discussion and Analysis (MD&A), SLB had executed a variety of strategic initiatives aimed at increasing cost and operational efficiencies, including organisational and personnel restructuring. Operating costs reduced 10% to RM43.8 million in the financial year ended March 31, 2021 (FY2021), down from RM48.7 million in FY2020.

Additionally, the MD&A states that the business tried to refinance its debt by taking advantage of the low interest rate environment. SLB reduced its finance costs by 20% to RM11.9 million in FY2021.

SLB said in October that its wholly-owned subsidiary Prestige Capital Sdn Bhd intended to sell six pieces of industrial development land in Ulu Langat, Selangor, to Perdana Park City Sdn Bhd for RM250 million, or more than two-thirds of the company’s market capitalisation.

The sale, which is slated to close in fiscal year 2022, is expected to significantly reduce SLB’s gearing ratio while also contributing to the group’s revenue and profitability in fiscal year 2022.

The proposed disposal, according to the filing with Bursa Malaysia, is expected to result in a gain after tax of RM74.24 million for SLB. It will double the group’s net assets per share to RM1.76 from RM1.62 as of March 31, 2020, and reduce the group’s net gearing ratio to 14% from 30% in FY2020.

Additionally, SLB notes in the MD&A that the business will focus on its landed developments going forward, owing to the fact that this type of property proved more resilient in FY2021.

As a result, the management has decided to postpone the launch of Illi @ Cheras, a retail and service apartment development project with a gross development value (GDV) of RM450 million, until FY2022.

Union Suites @ Bandar Sunway appears to be the group’s primary revenue generator, accounting for RM102.8 million or 39% of the group’s RM261.2 million revenue in FY2021.

Despite the epidemic, development on Union Suites @ Bandar Sunway progressed quickly. As of March 31, this year, the project’s work-in-progress was at 87 percent, with a take-up rate of 77 percent and a GDV of RM479 million. The project is anticipated to be completed in the fourth quarter of this year with vacant possession.

The overall remaining GDV and projected total GDV of SLB are not publicly disclosed. However, among the 11 forthcoming projects, the one that has garnered the most attention is the yet-to-be-named Lembah Ledang, which will have an initial GDV of RM5 billion and would span 19 acres in the Damansara Heights region adjacent to Istana Negara. Once the massive joint venture is launched, SLB’s one-third stake in it will keep the business busy for at least another decade.

SLB’s prospective participation in the development of a five-block luxury condominium with a GDV of RM1 billion, branded ORIC Gardens, near the Open Road International Circuit (ORIC) and Integrated Resorts in Langkawi is another noteworthy project scheduled for FY2022.

SLB signed a collaborative development agreement with Open Road Asia Sdn Bhd (ORA) on April 28. ORA is affiliated with Datuk David Goh. On March 31, ORA and the Kedah state government announced a strategic cooperation through Permodalan Kedah Bhd for the development of ORIC and Integrated Resorts in Langkawi.

It is worth noting, however, that the ORIC project, with an estimated GDV of RM1.3 billion, is still at the preliminary stage and is subject to final due diligence. Additionally, it has to be seen whether the apparent dispute between shareholders and directors will have an impact on SLB’s chances of participating in ORIC Gardens.

SLB owns a diverse portfolio of properties throughout the country. A simple count reveals that the organisation has a total of 26 land titles or lot units totaling around 720 acres.

Surprisingly, these assets were jointly worth almost RM850 million in terms of net book value as of March 31. The most valuable properties are a 397-acre quarry land in Hulu Langat for the extraction of rock reserves valued at RM163 million, as well as a 1.78-acre commercial development in Petaling Jaya’s Jalan Prof Khoo Kay Kim.

SLB is profitable; in its most recent financial year, it had a pre-tax profit of RM74 million. It does, however, have about RM400 million in debt.

Its share price has fallen to roughly 56 sen from a year-to-date high of more than 80 sen in April, when MBL acquired controlling interest. As of September 17, it has a market value of RM370 million.

Published by Zack Baharum

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