UPDATE: PRG eyes Myanmar, Philippines

KUALA LUMPUR (July 20): PRG Holdings Bhd, which is planning to develop affordable housing in Sungai Buloh, Selangor, is exploring business opportunities in Myanmar and the Philippines to expand the company’s construction and real estate development operations.

PRG managing director Datuk Lua Choon Hann (pictured) said it is now a good time to enter Myanmar and the Philippines as demand for affordable housing and infrastructure in these countries is strong.

However, he said the group’s plans to venture into the two countries are still at a preliminary stage.

“But if we were to enter, it will be on a small scale and in a cautious manner,” he said. “We are looking at affordable housing and infrastructure projects,” he added.

He was speaking at a media conference after PRG’s wholly-owned unit Premier Gesture Sdn Bhd inked agreements with Baycity Park Sdn Bhd and the parties’ joint venture (JV) company, Premier Baycity Sdn Bhd, to jointly develop affordable housing on a 2.6ha leasehold tract in section U5 in Sungai Buloh. Baycity is the owner of the land.

The project entails the development of 650 apartment units. Premier Gesture owns 51% of Premier Baycity, while Baycity holds the remaining 49%.

PRG said the JV was an opportunity “to expand its revenue sources”, and according to its property and construction segment’s chief executive officer Datuk Steven Hooi Kok Hoe, the JV should start contributing to the group in 2017.

Construction of the apartments is expected to start by year end or early next year, said Hooi during the signing ceremony.

Hooi said the group had yet to ascertain the estimated gross development value (GDV) of the project, pending approvals from the authorities, but shared that each unit will likely be priced between RM250,000 and RM400,000, or a selling price of RM400 per sq ft.

He said the project would be completed in 36 months and will be funded by bridging loans and sales from the project itself. The company has a gearing level of 0.32.

As for the group’s maiden development project, the Picasso Residence @ Jalan Ampang which has a GDV of RM600 million, Lua said the project had achieved a 60% take-up rate, with buyers mainly from overseas.

“We will officially launch this project in October, targeting local buyers,” he said, adding he expects the property market to recover in the second half of the year.

Formerly known as Furniweb Industrial Bhd, PRG was primarily a furniture webbing manufacturer before it ventured into property development.

In its financial year ended Dec 31, 2015 (FY15), net profit jumped 156.54% to RM6.08 million, as revenue gained 40.1% to RM129.32 million.

In FY15, revenue contribution from its manufacturing business was 68%, with the remaining 32% from property development ­­— compared with 8% in FY14.

While it is expected PRG’s property development’s revenue contribution may overtake the manufacturing business soon, Lua said the group has no intention to dispose of the latter.

“The manufacturing business is stable and still contributes significantly to us. We still have plans for the business,” he said, adding that the group is in talks with clients to develop new products going forward.

This article first appeared in The Edge Financial Daily, on July 20, 2016. Subscribe to The Edge Financial Daily here.

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