Saturday, May 24, 2014

About AMProp ... On A Sound Financial Footing

In March 2014 it was reported that the disposal of its stake in Kesas Holdings Bhd to Gamuda Bhd for cash of RM280mil may be paid out as dividends.

The sale of Amcorp’s 20% equity in Kesas was approved and expected the exercise to be completed by the middle of April 2014.

The proceeds from the disposal would be used on the repayment of Amcorp’s bank borrowings (RM75mil), committed capital investments (RM104.6mil), future capital investments (RM80mil), working capital (RM20.2mil) and the remainder to defray the expenses for this disposal.

The disposal is in line with the group’s objective to dispose non-core assets. Subsequent to the disposal, Amprop can then devote more of its resources to core businesses, particularly, in property division and renewable energy projects.

It would see a finance cost savings of about RM4mil per year post this corporate exercise.

AMProp however has ready committed capital invesments that will see some funds being used for this purpose including its property development projects in London (RM89.1mil) and its hydroelectric plant projects in Pahang (RM15.5mil).

To recap the business reorganization exercise undertaking by AMProp from Aug 2008 has proved to be fruitful for the group. It is now on a sound financial footing and focused on growing its property investment, engineering and renewable businesses.

It undertook a major overhaul of its businesses then through capital reconstruction, the acquisition of property development and other businesses from its major shareholder AMCorp Group Bhd and the disposal of non core businesses.

The results of the transformation include a healthier balance sheet, sustainable recurring income businesses as well as higher profitability.

The most striking element of AMProp’s transformation story is its investment in prime commercial properties in London. This started in Sept 2009 which acquired two office tower worth 50.5 million pound though its 60% owned subsidiary. In less than two years it disposed the subsidiary realizing a gain of rm74.8 million.

In Aug 2013, it was partnering Singapore listed Hotel Properties Ltd to develop 72 apartments with a GDV of more than 560 million pound on a two acre parcel in central London.

In Malaysia, AMProp decided to rationalize its property development and sold its land in Pulau Indah for rm130 million in 2008 and another tract in Sepang for rm122 million in 2011.

The proceeds from the disposals helped AMProp reduce its short term borrowings for FY2008 to rm34.8 million in FY2013.

Upon disposing of its land in Pulau Indah and Sepang, the group acquired 188 acres of Shah Alam which are being developed into a premium residential development and 737 acres in Sibu in 2009.

These acquisitions were paid for mainly through the issuance of AMProp shares to AMCorp, thus enabling AMProp to acquire the land in Shah Alam and Sibu.

They will keep AMProp busy for five to 10 years from 2013 and help maintain its cash flow, reduce its debt and improve its profitability.

Its net assets per share stood at rm1.35 as at Sept 30 2013.

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Please note that all data given are merely blogger's opinion. It is strongly recommended that you do your own analysis and research before investing.