PETALING JAYA: Crest Builder Holdings Bhd expects to sustain its strong earnings performance in 2008 on the back of RM920 million worth of construction projects in hand and significant contribution from its property development projects, its managing director Yong Soon Chow said.
He said the property projects that were expected to enhance Crest Builder's financial year 2008 (FY08) earnings included its ongoing Alam Hijau mixed development in Batu Tiga, Shah Alam and its just completed 3 Two Square project in Petaling Jaya, Selangor. "More property projects are expected to be launched this year, and the company is already receiving annual recurrent revenue from the 3 Two Square project," he told The Edge Financial Daily.
"Meanwhile, we are bidding for more than RM2 billion worth of construction contracts annually with a historical success rate of 15% to 20%. We are also in talks to obtain some Ninth Malaysia Plan (9MP) projects under the Private Finance Initiative (PFI) scheme." He said the first two phases of the five-phase Alam Hijau project have been sold to Syarikat Perumahan Negara (SPN) for RM147 million.
The company plans to build service apartments with a gross development value (GDV) of RM80 million in Alam Hijau's Phase 3 and commercial development comprising shops and an office tower worth RM120 million in Phase 4. Both phases are pending the authority's approval and are expected to be launched in the second half of this year. Phase 5 of Alam Hijau, a commercial development, is still in the early design stages.
Crest Builder is also undertaking a commercial development project, Tierra Crest, in Kelana Jaya and a high-end condominium project in Mont' Kiara.
Tierra Crest comprises two blocks of 17-storey office buildings on a three-storey podium. "We are in the midst of finalising the layout plans of the buildings," Yong said, adding that the company expected a 30% gross profit margin from the RM120 million development.
"We plan to keep the building for leasing purposes, but we might consider selling it if the price is good. We might sell one block and keep the other block for rent. Construction works are expected to kick off in first quarter this year," he said. "We foresee a big boom in the Kelana Jaya area due to more and more multinational companies moving out from the KL city area and Damansara Heights into Petaling Jaya."
The Mont' Kiara project, with a GDV of RM150 million, consists of luxury high-end condominiums with a selling price of at least RM600 per sq ft. Construction will commence by end-2008 with the launch targeted for next year.
Yong said the company's FY07 earnings came mainly from its flagship project 3 Two Square, which comprises 199 units of offices and 38 shoplots. It has achieved a 92% take-up rate with a profit after tax margin of between 35% and 45% for the project.
"We are optimistic of selling the remaining units by first quarter this year," said Yong, adding that it was keeping the 3 Two Square's corporate tower and carpark for leasing purposes. "To date, 80% of the units have been rented out at an average rental rate of RM3.50 to RM4 per sq ft; this adds RM7 million to RM8 million to us annually. We plan to lease remaining units by this quarter," he said.
The property development division was Crest Builder's main income earner in FY07, accounting for some 70% to 80% of operating profits As for its construction division, Yong said the RM920 million order book (including RM130 million in-house jobs) and RM600 million unbilled orders, were sufficient to sustain its construction revenue for the next two years.
Crest Builder's cumulative earnings of RM27.8 million net profit for the first nine months of FY07 have exceeded its FY06 full-year earnings of RM20 million.