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Home / 2013: Annual Report: Managing Director’s Message

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Managing Director’s Message

The steady construction progress of the Penang Second Bridge in the year, which was completed on 2 March 2014, coupled with the state Government’s focus to develop the manufacturing and services sector, accelerated the growing vibrancy in Mainland Penang, thereby enhancing the attractiveness of the Mainland Penang property market.

With its long experience in delivering affordable residential housing and high-quality developments primarily in Mainland Penang, Tambun Indah was able to leverage on its expertise to effectively capitalize on the rising housing demand.

Operations Review

The sustained demand for our properties is demonstrated in the improved property sales in the year under review. We sold a total of 1,058 units of property in FY2013 – 10.6% higher compared to 957 units in the previous year.

More significantly, the Group was able to secure better selling prices for its products, with total FY2013 property sales rising 23.6% to RM495.7 million, from RM400.9 million in the previous year. The commendable uptrend undoubtedly reflects buyers’ acceptance of our suite of products, and affirms our timely property launches in line with demand.

Tambun Indah launched in early FY2013 the first phase of Pearl Avenue in Pearl City, a new commercial development which features two-and three-storey shop offices with an estimated gross development value (GDV) of RM82.6 million.

The Group also launched the subsequent phase of the Straits Garden development in FY2013, consisting of apartment units with a total estimated GDV of RM27.1 million. The Penang Island development was first launched in the financial year ended 31 December 2012 (FY2012) and had received warm reception from buyers.

Combined with previous launches in the recent years, the GDV of the Group’s ongoing projects totalled RM1.34 billion as at 31 December 2013.

Of this, the Group achieved an average take-up rate of 83.5% for all of its ongoing projects as at 31 December 2013. Unbilled sales stood at RM455.4 million which will be recognized over the next two to three years.

• Simpang Ampat

Pearl City, the Group’s flagship integrated township, is located in Simpang Ampat. Started in 2009, the township with a total projected GDV of RM3.2 billion is only in the fifth year of development. Up to end-FY2013, more than 930 units of residential and commercial properties had been built. Pearl City’s close proximity and easy access to the Penang Second Bridge provides further appeal to our prospective buyers.

We believe that the township’s strategic location and our strong record of delivery in Pearl City have led to improving take-up rates for ongoing projects in the township, namely Pearl Villas, Pearl Square 1 & 2, Pearl Indah 1, 2, & 3, Pearl Residence, Pearl Impian, and the first phase of Pearl
Avenue.

Tambun Indah has commenced work on the Pearl City Business Park, a dedicated 107-acre commercial enclave in the heart of the township. The Business Park is planned to have facilities like a shopping complex, retail shops, food and beverage outlets, to be the lifestyle and recreational
destination of choice for residents in Pearl City and the surrounding vicinity.

In May 2013, Tambun Indah sold a 15.55-acre land in Pearl City Business Park to TNC for the development of a shopping complex. TNC is 50-50 owned by our wholly-owned subsidiary, Palmington Sdn Bhd (PSB), and Ripro Sdn Bhd.

The first phase of the planned shopping complex in Pearl City Business Park covers a build-up area of not less than 200,000 square feet, and construction is expected to be completed by end-2015.

Another major development in the year was the partnership between Tambun Indah and GEMS Maju Sdn Bhd (GEMS Maju) to establish a GEMS International School campus within the Pearl City Business Park. Under the agreement, Tambun Indah will construct the school campus and lease
it to GEMS Maju for a period of 30 years. The international school, being the first in Mainland Penang, will cater to the growing community of expatriate families living in the mainland and raise the profile of the township. GEMS International School Penang is set to be completed in mid-
2015.

Recognising the growth potential of Pearl City, the Group acquired the remaining minority equity interest in two subsidiaries that are undertaking the development of the Pearl City township, namely PSB and Tambun Indah Development Sdn Bhd. Following the completion of both acquisitions in November 2013, the Group has full ownership of the Pearl City township project, and this will contribute positively to the Group’s revenue and profit in the future.

• Butterworth

Located just across the channel from Georgetown, with close access to the ferries and the Penang Bridge, Butterworth is an established
town in Mainland Penang.

In keeping with our track record, we completed and delivered Dahlia Park in 2013, which consists of an 18-storey block containing 134
condominium units and 12 units of shop offices.

In the same year, we also completed and handed over Tanjung Heights, featuring a 13-storey block comprising 148 condominium units, a
four-storey multi-level car park and 17 units of shop offices.

At end-FY2013, both of our ongoing mixed development projects, Kelisa Residence and Carissa Villas enjoyed steady demand, a reflection of our reputation in Mainland Penang.

• Bukit Mertajam

Tambun Indah completed Impian Residence in 2013, which consists of two-storey terrace houses in Alma, Bukit Mertajam.

Given their strategic location, our other projects, Juru Industrial Park which comprises industrial factories, and BM Residence, a mixed development of condominiums and landed residences, continued to experience strong interest in 2013.

Penang Island

Tambun Indah’s sole development in Penang Island, Straits Garden, was launched in October 2012. Our ongoing phases of high-end executive/studio business suites, condominiums and apartments have also received positive response from prospective buyers. Straits Garden is targeted for full completion in 2016.

Growth Strategies

There is no doubt that the Penang economy is set to grow further, given the tremendous influx of foreign as well as local investment. This shall
lead to ample job creation in the coming years, particularly in Mainland Penang. The corresponding migration of the workforce, not only from within Penang but also from the northern region, is expected to increase the demand for properties.

Furthermore, with prices of properties on the Penang Island rising beyond the means of the middle-income group, we believe that demand for
affordable residences remains intact. Moreover, the recently-opened Penang Second Bridge would greatly enhanceconnectivity between Penang Island and Mainland Penang, thereby acting as a growth catalyst for business and population growth.

Mindful of the major infrastructure boost and increasing job opportunities in Mainland Penang, we are optimistic of the Group’s prospects going into 2014.

Hence, we will maintain our focus on rolling out more affordable yet high quality residential properties on the mainland. To this end, Tambun Indah is targeting to unveil six new residential and commercial projects with an approximate GDV of RM690.0 million in FY2014 to meet the anticipated demand.

Also, we will continue seeking suitable partners for Pearl City Business Park to achieve our objective of becoming the preferred lifestyle hub in Mainland Penang.

As at 31 December 2013, Tambun Indah has more than RM2.5 billion GDV worth of projects in the pipeline, while the Group’s total undeveloped
landbank size stands at 595.2 acres which should meet our development needs in the medium term.

Still, we will sustain our efforts to identify and expand our landbank within and beyond Penang to sustain our growth going forward. We intend to
continue leveraging on our township development experience to duplicate our success.

Lastly, we will continue to innovate product designs and lifestyle concepts to build on Tambun Indah’s brand image as a quality developer with groundbreaking ideas at affordable prices.

Conclusion

Heading into 2014, the Group will continue to implement sound strategies to overcome the many uncertainties in the property market to ensure the sustainability of our business in the Malaysian property market for the longer term.

We are hopeful that we can count on your continued partnership, confidence and support in the future.

Thank you.
Ir. Teh Kiak Seng
Managing Director