Monday, October 21, 2013

Malton - project shopping mall in Bukit Jalil

The company has obtained shareholders’ approval for a property swap and will soon unveil a project in Bukit Jalil that will boast a shopping mall.

The property swap will see Malton exchanging its 20 storey office tower – V Square in PJ – for new units in a redeveloped Pusat Damansara while the 50 acre Bukit Jalil project will be jointly undertaken with Ho Hup Construction Bhd.

As at June 30, 2013 Malton had rm115.19 million of RCSLS outstanding, bearing an annual coupon of 6% for seven years from July 2011, With a par value of rm1, each of the RCSLS is exchangeable for a new share in Malton.

 Its net asset per share stood at rm1.46 as at June 2013.

Putting its shares and RCSLS together, the combined market worth of Malton is rm497 million. This is the same as the company’s EV as its total cash holding of rm89.98 million more or less squares off against its borrowings of rm88.57 million.

Desmond Lim and wife and Datin Tan together control a 37.9% stake.

Of Malton’s market worth of close to half a billion, its PDB entitlement in the propery swap accounts for rm200 million. The remaining rm300 million ascribed to the company trails its potential gains from the Bukit Jalil project, which Ho Hup’s management estimated had a GDV of more than rm4 billion three years ago (2011).

Apart from these, Malton also owns pockets of development land in various parts of the Klang Valley.

It has a JV agreement with Batu Kawan Development Sdn Bhd as well as to develop 300 acres with an estimated GDV of rm3.8 billion in southern Prai, Penang over 10 years. Malton is entitled to 82% of the GDV and landowner Batu Kawan the remaining 18% or not less than rm300 million.

In the property swap, Malton is to dispose of V Square, which has a net lettable area of 163504 sqf and parking bay to BDDSB, an indirect subsidiary of JCorp. In exchange, it will receive from BDDSB 186667 sq f of NLA valued at rm140 million in a redeveloped PBD.

On a psf bsisi, the NLA at V Square is valued rm680 while the parking bays are worth rm30000 each. In comparison, Malton’s entitled NLA in a redeveloped PBD is valued at about rm750 psf, which indicates a upside potential. The two MRT stations coming up in Jalan Semantan and PBD too augur well for the redevelopment project.

On top of the property swap, Impian Ekspresi Sdn Bhd, a private vehicle controlled by Lim and two other individuals, has granted Malton a put option to sell its entitled 186667 sq ft in a redeveloped PBD at rm825 psf at the beginning of a four year period to rm1050 psf at the end of period.

This works out to about 10% to 40% higher than rm750 psf which means Malton could sell the entitlement to Impian Ekspesi for rm154 million to rm196 million cash within the next four years. Depending on its capital needs, the group could opt to exercise the put option to raise cash for its project in Bukit Jalil.

Impian Ekspresi is acquiring the 9.6 acre PBD land from BDDSB, having agreed to pay rm500 million cash and to deliver 266667 sq ft of office space in a redeveloped PBD to the latter. While Malton is not the project owner, the speculation is that it may be project manager fro the PBD redevelopment like it was for Lim’s privately owned Pavilion project in KL.

Nonetheless, the joint development with Ho Hup in Bukit Jalil is set to be a game changer for Malton. It is entitled to 82% of the project’s GDV while land owner Ho Hup’s share is 18%.

Malton had indicated that it will launch new property projects in the Klang Valley including the Bukit Jalil in FY2014.

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