The Groupâ€™s financial year ended 31 December 2017 (FY2017) reflected another challenging year for the
Malaysian property market. The property development sector remained bearish on the back of cautious consumer spending amidst uncertain economic sentiment and stringent criteria of financial institutions constraining the disbursement availability of housing loans. Against this backdrop, Tambun Indah launched fewer new projects in the year under review, commensurate with buyersâ€™ cautious stance. Therefore, group revenue for FY2017 stood at RM282.1 million compared to RM360.8 million previously,sustained mainly by progress billings for ongoing projects.
Consequently, Tambun Indah delivered profit before tax (PBT) of RM110.6 million and net profit attributable to shareholders of RM84.1 million in FY2017. In comparison, the Group reported PBT and net profit of RM148.8 million and RM112.2 million respectively a year ago. Correspondingly, basic earnings per share decreased to 19.5 sen in FY2017 from 26.4 sen a year ago.
In FY2017, the primary revenue drivers for the Group were property development and property management segments, accounting for RM277.2 million or 98% (FY2016: RM356.6 million or 99%) of the Groupâ€™s total revenue. This was mainly underpinned by revenue recognition from ongoin construction of projects in Bandar Tasek Mutiara (Pearl City) during the financial year, bolstered by sales from new launches and three successful completed developments in Penang, namely Straits Garden in Jelutong, Camellia Park in Butterworth and Permai Residensi in Bukit Mertajam.
The Groupâ€™s investment holding segment recorded improved revenue of RM4.9 million (FY2016: RM4.2 million), with the addition of improved rental income from Straits Garden commercial shop. Tambun Indah made conscientious efforts to maintain a strong balance sheet as part of reinforcing our foundation amidst the soft property development landscape. As at end- FY2017, shareholdersâ€™ equity rose to RM581.2 million from RM536.4 million in the previous period on higher retained earnings. Total borrowings reduced to RM106.4 million from RM138.2 million in the previous year-end, as did the short term funds and cash and bank balances to RM105.3 million from RM120.8 million. This has resulted the Group being in positive financial health with a net gearing of 0.002 times.
The Groupâ€™s net assets attributable to shareholders stood at RM581.2 million, an improvement from RM536.4 million as at end-FY2017. On a per share basis, net assets attributable to shareholders improved to RM1.34 from RM1.26 in the same period.
The Group is committed to the payment of annual dividends and has a progressive dividend policy that pays 40% to
60% of net profit, excluding any valuation gain or loss on investment properties.
Tambun Indah declared an interim single-tier dividend of 3.0 sen per share in respect of FY2017 which was paid on 12 February 2018.
The Board had also proposed a final single-tier dividend of 4.7 sen per share for shareholdersâ€™ approval at the
forthcoming Annual General Meeting.
Together, total dividends declared in respect of FY2017 amounts to 7.7 sen per share, representing a dividend payout of approximately RM33.4 million which constitutes 40% of the Groupâ€™s net profit, excluding valuation gain on investment properties.
With 24 yearsâ€™ experience in innovative property development and vast number of satisfied home-buyers, Tambun Indah remains dedicated to not just building homes, but to strengthening communities as well, by creating developments of outstanding quality and sustainable living environment in a strategic location.
We are pleased to note buyersâ€™ appreciation of these attributes, demonstrated by a strong take-up rate of 69.65% across ongoing projects valued at total Gross Development Value (GDV) of RM848.5 million in end-FY2017.
During the financial year under review, Tambun Indah has launched two new projects, Pearl Evergreen and Pearl Saujana Permai, with a combined GDV of RM133.1 million.
With the exception of Residensi Bukit Kecil, the on-going projects are part of the developments in the growing township of Pearl City.
In FY2017, Tambun Indah successfully sold 289 units of properties valued at RM146.3 million in total. Unbilled sales at end-December 2017 stood at RM66.0 million which would be recognised in the next two years.
Tambun Indahâ€™s 1,200-acre Pearl City township is ideally located in the southern area of Mainland Penang, which
is the hotbed of commercial and industrial development and thus anticipated to witness strong population growth
for many years to come.
The Groupâ€™s flagship township saw two newly launched projects in 2017, namely Pearl Evergreen and Pearl Saujana Permai. Pearl Evergreen is an exclusive ecoliving residential community, comprising 30 units of double-storey linked semi-detached houses and bungalows. Pearl Saujana Permai in the meantime offers a total of 219 residential units of double-storey semidetached houses and double-storey terrace houses.
Both developments are strategically located close to North-South Highway, Penang Second Bridge, Penang Science Park, Bukit Minyak Industrial Park and more. It is also surrounded by comprehensive amenities, broad choice of learning institutions, supermarkets, shops, and other facilities. These two projects have achieved cumulative take-up rate of 19% as at end-2017, amidst challenging outlook of the property development sector in Malaysia.
Pearl City currently has developed more than 7,000 homes since its commencement more than 10 years ago, and today boasts a significant population within a vibrant integrated township. To foster community sustainability, the Group successfully developed and delivered a futsal court and Pearl City hawker complex to the Seberang Prai Municipal Council (MPSP) for communityâ€™s convenience and enjoyment. The Group has also partnered with Telekom Malaysia to facilitate the deployment of converged telecommunications and smart services, including UniFi into Tambun Indahâ€™s developments.
These complement the existing facilities of various reputable schools, food and beverage outlets, retail
outlets and Pearl City Mall which began operations in 2016.
Tambun Indahâ€™s portfolio of investment properties comprises of the Groupâ€™s prime assets within its development. The Group continues to yield a steady revenue stream from its investment properties, such as GEMS International School (Pearl City) and Straits Garden Commercial Shop, as well as the recurring income from the joint venture company, TNC Capital Sdn Bhd which owns Pearl City Mall.
GEMS International School (Pearl City), with capacity of up to an enrolment of 1,500 students, started its first semester intake in September 2015. With the increasing preferences for premium English medium international schools in Malaysia, GEMS International School, being the first international school in Mainland Penang, meets the needs of the local residents and is poised for a strong growth potential.
At the heart of Pearl city is the 170,000 sq ft Pearl City Mall, which is master leased to C-Mart, a well-known mall chain in Northern Peninsular widely visited by the general public and has begun operations since 2016. Pearl City Mall continued to stamp its mark in bringing reputable brands, attracting Quan-U furniture store, one of the largest furniture manufacturers in Asia, during the year.
This new addition will benefit the residents in the township as well as the surrounding vicinity, hence further creating more value to Pearl City Business Park.
Operational and Financial Risks
Like all domestic property developers in Malaysia, Tambun Indahâ€™s operations are mainly influenced by the nationâ€™s economic wellbeing, federal and state regulations and policies.
Industry reports indicate that the local property development industry for 2018 is estimated to continue being challenging due to soft consumer spending, stringent loan requirements, and increasing cost of living.
The Group is mindful of new players entering and existing players accelerating their expansion in Mainland Penang. The Group has proactively taken steps to solidify its position by adapting our products offerings to meet buyersâ€™ needs and embarking on localised marketing strategies to reflect current sentiment.
In response to the challenging market conditions, the Group would focus on further enhancing the value of our existing landbank by offering various amenities to capture prevailing trend of property buyers. The Group wouldÂ also supplement these efforts by maintaining an efficient cost structure and healthy financial position. The Group also continually engages the public to attract prospective buyers of various focus groups via strategic marketing and
advertising, thus enabling valuable two-way feedback for future decision-making.
Overall, Tambun Indah intends to continue managing inherent risk to the property management sector through efficient operational model and prudent financial administration.
We remain resolute in the Tambun Indahâ€™s capability for growth on the back of our strategically-located landbanks, strong balance sheet and integrated sustainable living approach to property development.
In FY2018, we hope to launch two new projects with total GDV of RM158.0 million, comprising Palma Residency and Palm Garden. Palma Residency is a landed gated and guarded community which is located at a prime location in Alma, Bukit Mertajam, comprising 90 units of terrace house. Palm Garden in the meantime offers a total of 335 units of serviced apartments in two 18-storey blocks adjacent to GEMS International School.
The Group currently has a pipeline GDV of RM3.0 billion yet to be developed and is expected to contribute positively to the Group’s revenue over the next seven years.
To gain top-of-mind awareness and demonstrate our enduring commitment to improvement, the Group will continue to focus on further developing its existing landbank in Pearl City and equipping the township with new and exciting living solutions to foster stronger community lifestyles and promote vibrancy.
At the same time, Tambun Indahâ€™s healthy balance sheet places us in prime position to constantly look out for compelling landbank opportunities for future expansion. This would be our foremost priority to ensure sustainable continuity in the long term.
Overall, the Group has overcome a tough FY2017 and the current difficult environment is expected to persist into the next financial year. Nevertheless, Tambun Indah is confident that with the Groupâ€™s strong brand name, strategically-placed established developments and right product strategies, we will continue to move forward resiliently and strive towards enriching the lives of communities together.
On behalf of the Board, we would like to convey our sincere appreciation to our shareholders, business associates, staff, stakeholders and most importantly our customers for your continued support and belief in Tambun Indah.
Ir. Teh Kiak Seng