Malaysian company keeping an eye out for opportunities to venture further abroad in the future
By NG MIN SHEN / Pic By MUHD AMIN NAHARUL
FAJARBARU Builder Group Bhd, Beulah International and KHK Group Ltd have secured funding of close to A$100 million (about RM300 million) from Malayan Banking Bhd (Maybank) for a joint luxury apartment project in Australia.In conjunction with the financing initiative, a facility agreement was signed between Maybank and SPV 320 Queen Street Pte Ltd in Kuala Lumpur yesterday.
The three parties are the developers behind Paragon, a project situated in Melbourne with a gross development value (GDV) of A$200 million.
It is led by Melbourne-based developer Beulah International, which has the largest stake at 42.78%, followed by KHK Group with a 35% stake and Fajarbaru with the remaining 22.22%.
“We believe that the Australian property development market will continue to provide a healthy income for Fajarbaru in the coming years, driven by growing demand for Australian properties from the influx of new arrivals and the local market for high quality Australian properties,” Fajarbaru group ED Datuk Seri Eric Kuan Khian Leng said at the signing ceremony yesterday.
He said the group, which is mainly involved in construction, timber and property development, will continue to look to Australia in the short to medium term for its property segment, while keeping an eye out for opportunities to venture further abroad in the future.
The project is the second development undertaken in partnership between Fajarbaru and Beulah International, following the completion of their first jointly-developed project, Gardenhill in Melbourne, with a GDV of A$77 million.
Maybank corporate banking MD Michael Oh-Lau Chong Jin said the success of Gardenhill, which was also funded by the bank, was the main driver in the lender’s backing of the new Paragon project.
According to Beulah International MD Chan Jiaheng, the project, which will be home to Australia’s first elevated indoor forest and 227 luxury apartments across 48 levels, has already secured sales of close to 90%, of which about 30% are Malaysian purchasers.
“Our target is to achieve 100% sales by the end of the construction period. Currently, our strategy is to continue to sell with minimum marketing costs because we have two years to achieve 100%.
“There’s no business benefit to achieve 100% right now,” Chan said.
Construction has commenced, with project completion expected by the end of the third quarter of 2020 (3Q20) or early 4Q20, Chan added.
As at 3.41pm yesterday, shares of Fajarbaru were up four sen, or 8.64%, at 44 sen, giving it a market capitalisation of RM164.02 million. The stock saw 4.32 million shares changing hands.
Maybank rose 27 sen or 2.81%, to RM9.87, giving the country’s largest bank by assets a market capitalisation of RM107.56 billion, with 10.16 million shares traded.
Loan deal: Chan and Maybank corporate banking MD Caroline Teoh at the agreement signing for a bridging loan facility for the Gardenhill condo project in Melbourne.
PETALING JAYA: Small-cap contractor Fajarbaru Builder Group Bhd has property projects with a gross development value (GDV) of RM728mil in Malaysia.
Besides that, its first overseas joint-venture project in Melbourne, which has a GDV of A$77mil (RM215.6mil), has seen a take-up rate of 80%.
The construction player, with a market cap of RM139.77mil, plans to launch three projects in the Klang Valley and Malacca by the end of 2016. These include a condominium project in Puchong with a GDV of RM400mil, a serviced apartment project in Sentul with a GDV of RM250mil and serviced apartments in Malacca with a GDV of RM78mil.
Its property division manager Yau Tuck Wai said it would launch the Puchong project by year-end, the Sentul project in the first quarter of 2016 and the Malacca project in the third quarter of 2016.
At the signing ceremony of a loan facility agreement with Maybank, Yau said the 136-unit luxurious condominium project at the Doncaster suburb of Melbourne would be completed by end-2016 or early-2017. The 0.6 acre was bought a year ago for RM20.61mil.
Its finance director Ooi Leng Chooi said the 51%-owned Fajarbaru-Beulah (Melbourne) Pty Ltd, that was working on the Gardenhill project in Melbourne, would contribute positively to its earnings once it was completed. For its third quarter ended March 31, close to 80% of its revenue came from construction activities.
Its current unbilled order book is RM450mil.
Fajarbaru-Beulah executive director Chan Jiaheng expects the construction of the project to start in six weeks’ time, while the whole project would take about 15 months to complete.
“We’re finalising the contractors now,” he said, adding that buyers of the high-end condos comprised a mix of foreign and local investors as well as buyers for own-stay.
Ooi declined to comment on the amount of loan taken for the Australian project, but conceded that it would inevitably impact its gearing. The firm’s total borrowings was at RM46.97mil as at March 31, while cash and cash equivalents stood at RM36.9mil.
He said the facility was in Australian dollars to mitigate currency exchange risks.
The units are priced at about A$700 per sq ft.
For the third quarter ended March 31, net profit fell 18.1% to RM782,000 compared with RM955,000 a year earlier. Revenue for the same quarter surged 93.1% to RM106.03mil from RM54.92mil a year ago.
As for its first nine months, earnings jumped 35.34% to RM3.37mil from RM2.49mil in the previous corresponding period, while revenue rose 28.3% to RM274.66mil from RM214.1mil.
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