PETALING JAYA: Eastern & Oriental Bhd (E&O) has taken another step in realising the development of phase two of its Seri Tanjung Pinang (STP) project in Penang.
Last Friday, the company completed the public display of the detailed environmental impact assessment (DEIA) report, and is now awaiting approval from the Department of Environment (DOE) to begin reclamation works on the project that is slated to cover an area of 760 acres of reclaimed land.
In tandem with the development in Penang, what is more telling is E&O’s share price inching closer to the RM2.30 mark, which was the entry price of Sime Darby Bhdinto the company in 2011.
That acquisition had sparked off a controversy because Sime had acquired almost 31% from three major shareholders of E&O, including the group managing director (MD) Datuk Terry Tham. The other shareholders were Tan Sri Wan Azmi Wan Hamzah and GK Goh of Singapore.
Post-disposal, Tham remained as group MD. Along with Wan Azmi, the duo still continued to hold some shares in E&O.
Some minorities had alleged that Sime should be compelled to undertake a mandatory general offer (MGO) because they contended that the conglomerate was acting in concert with the majority shareholders.
Sime’s acquisition was a huge 60% premium over E&O’s market price then, which was about RM1.45.
Subsequently, after a lengthy process, the Securities Commission (SC) finally ruled that Sime was not acting in concert with Tham and the other two vendors, and that the conglomerate need not undertake an MGO.
This prompted minority shareholder Micheal Chow Keat Thye to file a suit seeking a judicial review of the SC’s decision. The case is still pending.
E&O shares closed at RM2.20 yesterday, which is just 10 sen short of Sime’s entry price into E&O in 2011.
An analyst said the lift in the share price valuation was happening at a time when the timeline to the launch of STP phase two (STP II) was drawing closer.
If the STP II development in Penang materialises, then it is set to give a boost to the project developer, E&O’s sales and earnings potential in the years to come.
The DEIA report has been submitted to the DOE for approval and had also been displayed to the public for feedback until March 28.
The STP II project, which is a continuation of the 240-acre STP phase one in Tanjong Tokong, is expected to be developed over 15 years.
E&O group deputy MD Eric Chan said the company was targeting a cumulative profit after tax of between RM450mil and RM500mil for the financial year ending March 31, 2014 (FY14) through to FY16.
He said the cumulative earnings figure was a realistic mid-term goal post, given the nature of the property development business that spans a timeframe involving planning, construction and delivery.
“E&O has always looked beyond short-term goals, as a longer-term approach is more sustainable and holistic since it also allows the company to achieve meaningful progress in qualitative aspects such as branding and positioning. The earnings streams will be supported by a number of ongoing developments within and outside the country,” he told StarBiz.
Within the first quarter of this year, E&O is targeting the maiden launch of Avira, a joint venture between E&O, Khazanah Nasional Bhd and Temasek Holdings Pte Ltd to develop a 207-acre wellness sanctuary of mixed development in Iskandar Malaysia.
The project, with a gross development value (GDV) of RM3.5bil, will take five to seven years to complete. The Avira terraces and serviced residences with a GDV of approximately RM1bil is targeted for launch in the first and second half of this year.
Chan said an ongoing project, The Mews, comprising two towers of serviced apartments in Kuala Lumpur with a GDV of RM400mil, is also available for sale. The project was launched at the end of 2013.
In Penang, the Andaman Edition 18 East condominiums in STP with a GDV of RM800mil will be launched in the first half of this year.
He said the stylish residences on the most prime lot overlooking the Andaman Sea was the only condominium project in the country with a 4.5-acre residents’ waterpark and another seven acres of greens.
In London, E&O’s maiden offshore project, Princes House, launched last month has received positive response, with close to 80% of the units being taken up.
Located at the heart of the arts, shopping and business scene, Princes House is a prime freehold building in the Borough of Westminster.
The RM250mil project involves the refurbishment of the building into a tastefully-designed high-end apartment block with 20 residential units and 34 serviced apartments ranging from 428 sq ft to 2,714 sq ft. Prices average £1,800 (about RM9,844) per sq ft.
Chan said while the focus of E&O was on its existing growth engines, the company was also looking at other new potential growth areas that were aligned to its values and brand positioning.
“The company’s hospitality and lifestyle arm is also a vital complement to its core activity of property development that enables E&O to become an aspirational lifestyle developer. We are progressing well on this front, targeting a revenue of RM100mil for FY14-FY15,” he said.