E&O plans to roll out RM1b worth of projects in FY17

Eastern & Oriental Bhd, which plans to monetise its land bank to improve cash flow, will be launching close to RM1 billion worth of projects in the current financial year ending March 31, 2017 (FY17).

E&O managing director Kok Tuck Cheong said the group will be rolling out the remaining phases of The Tamarind in Penang worth RM160 million, and the Conlay Place which carries a gross development value (GDV) of RM800 million by this year.

"We will also be intensifying our marketing efforts and proactively selling existing inventory, in order to generate positive cash flow and profit recognition," he told a press conference here today.

As at March 31, 2016, he said the group's unbilled sales stood at RM1.2 billion, which provides earnings visibility until FY18.

Kok also said the group views Bank Negara Malaysia’s (BNM) recent move to cut the overnight policy rate (OPR) by 25 basis points to 3% as “good news to the group” and hoped this could translate into new sales for E&O.

"We are also looking forward to [any] improvements in the lending guidelines," he added.

He said the OPR cut is also positive to the group's borrowings, as a majority of its debts are on floating rate. "According to our estimation, every 2 basis point cut in OPR would result in RM1.5 million in savings.”

According to E&O's annual report 2016, the group’s land bank spans 1,645.4 acres across Penang, Klang Valley and Johor.

"We are continuing to review (and) to see what are the opportunities to develop it in terms of timeline, as well as the GDV that we can generate under the current market scenario," he added.

Citing the group's tie-up with Japan-based real estate company Mitsui Fudosan Asia Pte Ltd (Mitsui) to develop the Conlay Place project along Jalan Conlay, Kok said this was one of the ways the group can reduce its development risks.

E&O is a premier property developer, with projects predominantly in Penang.

At 3.21 p.m., its shares were trading unchanged at RM1.68, giving it a market capitalisation of RM2.11 billion. — theedgemarkets.com