Chairman's Statement

Y.B. Senator Laksamana
Tan Sri Dato’ Setia Mohd Anwar
bin Hj Mohd Nor (Retired)
Independent Non-Executive Director

 

INTRODUCTION
On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Financial Statements of Titijaya Land Berhad (“Titijaya” or “Group”) for the financial year ended June 30, 2017. It gives me great pleasure to report another record year of performance by Titijaya, despite the challenging environment. It is with tremendous pride that I share with you, that the continuous investments made in our staff development and training have equipped our personnel with the strength and knowledge to manage and conquer all challenges that comes in our way. The Group has been very focused in executing our strategies for the year, which gave to rise to the improved set of numbers.

 

For the financial year ended June 30, 2017 (“FYE2017”), Titijaya posted a net profit of RM75.81 million, approximately 11% increase over the previous year. This is attributable to stronger sales achieved from our properties in the Klang Valley such as H2O Residences and 3elements.

 

CHALLENGES FACED
Without a doubt, one of our biggest challenges was our purchasers’ ability to secure financing for their purchases. Purchasers have had their applications turned down countless times that many are now unwilling to sign the sale and purchase agreements before securing a loan. Apart from the stringent loan requirements from financial institutions that are said to have caused the drop in the number of property transactions, the increasing cost of living and economic uncertainties have led to an upswing in worries about job security, which in turn resulted in more cautious consumer spending. Nevertheless, we believe this situation is turning positive, as not many are aware that in the first quarter of 2017, banks had approved RM22.3 million worth of housing financing to 90,137 borrowers across the nation. From this figure, more than half were borrowers of affordable housing units priced below RM500,000. This works in favour in our strategy and
approach to the market as houses priced at RM500,000 and below accounts for 40% for our current launches. Despite the challenging market condition, we have fared reasonably well. We have been strategic in our launches this year to suit market demand while continuing to deliver on our promises of quality, innovation, and reliable products and services. We believe projects offered by Titijaya are priced reasonably and this should augur well for us to navigate through all these uncertainties.

 

OUTLOOK & FUTURE PROSPECTS
The Group’s long-term growth prospects remain positive based on a strong competitive position and solid demand for the type of residential properties that the Group is offering.

 

It is difficult to predict when the property market will rebound. However, we expect the current subdued market to remain muted for the next 12 to 24 months with little signs of recovery. During the financial year, the ringgit also fell dramatically against the US Dollar to a low of RM4.50. The ringgit has recently trended upwards, but it is still far away from the heydays of before 2016. The fall in ringgit has a dual impact on our business as its movement during the current financial year will impact our costs and revenues.

 

While we have locked in our construction costs for existing projects, our future launches will still be subject to prevailing prices and will be determined by the margins that we can make on a  project. However, a weaker ringgit will make our products cheaper for foreign buyers and we hope that this will have a positive effect on our future sales. Additionally, we are also closely monitoring the actions of our peers and competitors, when it comes to mitigating the high loan rejection rates by the banks. Larger developers with stronger balance sheets are found to be able to offer some form of financing to their customers but for mid-sized developers like us, the options are often limited. Therefore, innovative sales methods and promotions play a big role for us to win customers. We have also embarked on tailoring our future launches to the specific needs of our targeted purchasers and we hope to launch more of these development types in the future.

 

The current buzzword for property development is affordable housing and our average product price range falls into this category, at prices below RM600,000 per unit. This category entails more than 80% of our total offerings. Moving forward, Titijaya has put in place a robust pipeline of new launches amounting to RM1.8 billion GDV in the coming months. We are optimistic with the future as we are well-positioned to deliver long-term shareholders’ value. While the near-term outlook for the residential sector remains mundane, we are of the view that it is sentiment driven, rather than fundamentally driven. The demand for housing, especially for young or first-time home buyers, is still robust.

 

We remain confident of the future performance of our business, given that most of our land banks are located in prime growth areas that are the targets of prospective buyers i.e. well-developed and connected locations with public transportation facilities. Furthermore, we are focused on product design, competitive pricing, and product differentiation with a strategy of “Built to Inspire”, which is the embodiment of our very own branding.

 

CORPORATE GOVERNANCE & SUSTAINABILITY
Titijaya focuses on maintaining high standards of corporate governance, compliance, business conduct, safety, and environmental management – all of which are vital to the Group’s performance and business sustainability. It is our belief that good corporate governance supports longterm value creation for all our stakeholders. Our Corporate Governance Statement can be found on pages 42 to 53.

 

DIVIDENDS
For FYE2017, the Board has recommended a final dividend of RM0.005 per ordinary share which is approximately RM2.05mil to be approved by shareholders at the forthcoming Annual General Meeting.

 

CORPORATE SOCIAL RESPONSIBILITY
Through our corporate social responsibility efforts, our goal is to improve the lives of others. At Titijaya, we do this by not only volunteering and supporting non-profit organizations, but also put our heart into the communities where we work and live. On 10 March 2017, we sponsored the third 10,000 Smiles Yoga that was held in conjunction with the United Nation’s International Day of Happiness on 20 March 2017. The event, which was organised by International Association for Human Values (IAHV) was held across Penang, Ipoh, Selangor, and Malacca. Registered in 21 countries, IAHV is a humanitarian, non-governmental organisation that is committed to the resurgence of human values in all challenging aspects of life across the globe. Titijaya shall continuously support the 10,000 Smiles Yoga as one of its corporate social responsibility activities. The objective of the 10,000 Smiles Yoga resonates well with the values that Titijaya wishes to impart to all.

 

ACKNOWLEDGEMENT
On behalf of the Board, I would like to extend my deep appreciation to the Board of Directors, our management, staff, and business associates for their staunch faith and commitment that has kept Titijaya going and progressing to where it is today. I would also like to express my appreciation to our valued shareholders for their unwavering support. We will continue to explore new opportunities and enhance our existing businesses to deliver greater shareholders’ value for all in the years ahead.

Thank you.

Yours Sincerely,
Y.B. Senator Laksamana Tan Sri Dato’ Setia Mohd Anwar
Bin Hj Mohd Nor (Retired)