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MK Land Holdings Bhd’s net profit jumped more than two-fold to RM7.2mil for the third quarter ended March 31 against RM2mil a year ago due to stronger performance of the property segment.

Its revenue for the period rose to RM165.1mil from RM94.7mil a year ago.

Going forward, MK Land’s executive chairman Tan Sri Mustapha Kamal expects “double-digit growth” buoyed by its on-going property projects and new launches.

In a briefing yesterday, Mustapha said the “momentum” for the group to achieve double-digit growth was already in place.

MK Land’s incoming CEO Lau Shu Chuan with Tan Sri Mustapha Kamal.

For the nine months ended March 31, MK Land posted a higher net profit to RM15.8mil on revenue of RM292.9mil.

The higher net profit was due to higher revenue and lower finance cost.

Its property development segment generated RM249.5mil, representing 76.2% of the total revenue for the nine months ended March 31. The revenue was mainly from its property projects in the Klang Valley, particularly its Damansara Perdana development.

MK Land had also appointed Lau Shu Chuan as its chief executive officer effective June 1, taking over from Mustapha. Lau is currently the chief operating officer. Mustapha will be redesignated as non-executive chairman.

Mustapha made a comeback as executive chairman on June 25, 2008 when the company was facing difficulties. The company posted a net loss of RM60mil for the financial year ended June 30, 2008 (FY08). He managed to steer the company out of turbulence and felt that it was time to pursue his charity works through his foundations – Yayasan Emkay Foundation, Orang Utan Island Foundation and Pulau Banding Foundation.

“I do not want you to speculate. There’s no other reason,” he said when explaining his leave from the company. Mustapha will remain as the major shareholder of MK Land.

Lau agrees with Mustapha on the company’s prospects. He said its products were well accepted in the market and that the group had a landbank of 5,000 acres with various developments.

On its gearing level, Lau said MK Land had managed to bring down its borrowing significantly. Its total borrowing stood at RM275mil against its shareholders fund of RM1.1bil.

“We will bring it (borrowings) lower. Our interest is eating into our profit. We have a systematic plan to bring down the gearing level,” he said. Lau, however, said the company’s borrowings might increase as it bought new landbank and to finance its joint venture project to develop affordable housing in northern Bangalore, India.

Meanwhile, he said MK Land’s shares were “undervalued”. He said the price, at over 30 sen, was still below the company’s net tangible assets (NTA). As at March 31, MK Land’s NTA stood at 87 sen per share.

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MK Land Holdings Bhd returned to the black with a net profit of RM18.3 million in its full year to June 30 2009, and it expects to do even better this year, driven by higher property sales.

The developer, which suffered a loss of RM60 million in 2008, said its turnaround was due to strong property and land sales.

“The strategies which we put in place during the recession has paid off and we are optimistic of seeing continuous growth in the current financial year,” said its executive chairman Tan Sri Mustapha Kamal Abu Bakar.

He said the company is seeing robust growth in sales despite the economic slowdown due to its properties’ strategic location and also a more stable property market.

“Another contributing factor is the success of our turnaround plan or renaissance which took place early July 2008,” Mustapha Kamal told reporters at a media briefing in Petaling Jaya, Selangor, yesterday.

MK Land’s revenue for 2009 stood at RM246.5 million as against RM137 million previously.

In the 12-month period, the group recorded sales worth RM136 million compared with only RM93 million previously.

Mustapha Kamal is confident the property market will continue its recovery over the next 12 to 18 months.

“With a total landbank of 2,833.6ha, we have enough landbank to last us for the next five years,” he said, noting that in the first three months alone until August, the group already achieved sales worth RM271 million.

The group has a total gross development value of RM19.8 billion.

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PROPERTY developer MK Land Holdings Bhd (8893) has posted a net profit of RM13.2 million for the nine months to March 2009, against a loss of RM18 million in the same period last year, attributed largely to higher property sales.

The improved performance has allowed MK Land to make an early payment of RM60 million as the final settlement of its outstanding bond, which is only due in September this year.

MK Land, in which Tan Sri Mustapha Kamal Abu Bakar holds a majority stake, slipped into the red in the 12 months to June 2007 and 2008 due to additional cost incurred because of errant contractors.

It was the period when Mustapha Kamal stepped down as executive chairman from April 2007.
Chief operating officer Fatimah Wahab said the profit for the period reviewed was driven by strong sales performance after Mustapha Kamal returned and turned the company around in June 2008.

Sales for the nine months jumped 180 per cent to RM185 million, in spite of the weaker property and economic market condition, Fatimah said.

Top company executives have also mapped out a turnaround plan that includes cutting operating overheads, increasing cash position and reducing debt on a timely basis.

“The early (bond) payment is a significant milestone for MK Land in its turnaround efforts. We have sent a message to our bankers, bondholders and other stakeholders that we are serious about our efforts to reposition MK Land,” Fatimah said.

MK Land will also embark on a corporate restructuring to lower the overall costs of funds and enhance earnings of share, she told Business Times.

The group had debts of RM500 million as at December 31 2008 and aims to reduce this to RM400 million by June and RM300 million by early next year.

“We will revisit the capital structure, treasury function and funding situation and see how they could be best structured to carry us forward. We have strategies in place to lower the cost of funds through innovative financial packages. We are talking to bankers,” Fatimah said.

She added that MK Land is looking at various ways to enhance its margins and banking on Armanee Terrace Condominium and Rafflesia, its two core products within its Damansara Perdana township in Selangor, to drive profits.

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