Managing Director's Statement

MANAGING DIRECTOR’S STATEMENT
Y. Bhg. Tan Sri Dato’
Lim Soon Peng
Group Managing Director

 

There are ups and downs in all industries and the same goes to the property industry that Titijaya has been in for the last 30 years. The company has gone through a few financial crises and still stands with its prudent management and robust strategies. We always believe that having innovative property products that are rightly priced, coupled with the right locations can never go wrong. We have done so for the year of 2017 and we will continue to be selective in our product launches going forward. We have faith in our products and we believe that market will be able to absorb what we are introducing and this gives us timely support whenever we need it, be it at corporate level or product wise.

 

STRATEGIC REVIEW
The years 2016 and 2017 were filled with a series of high impact global events, ranging from the collapse of oil prices, volatility of emerging market currencies against the US Dollar, effects of the UK Referendum to leave European Union (“BREXIT”), as well as the results of the US Presidential Election. On the domestic front, Malaysia’s property industry was impacted by the subdued property industry outlook, depreciation of the ringgit, higher cost of goods, stringent lending policies, and weakened consumer sentiments. Nevertheless, the affordable housing segment continues to be in high-demand, following the positive measures announced during the 2017 Budget, which enhanced access to financing.

 

As for Titijaya, it was an active year where we remained resilient and focused on delivering growth and long-term shareholders’ value. We took appropriate and deliberated actions to drive performance. As a result, our business emerged stronger, despite the tough challenges faced during the previous financial year. Building on our strong relationship with CREC, the Group expanded this partnership, firstly in 3rdNvenue in 2016, followed by The Shore @ Sabah in 2017. We selected CREC as our partner because of its international experience and expertise in the construction industry. Having CREC as a JV partner enabled us to capitalise on new opportunities and to tap on new markets for Titijaya. This partnership strategy is a stepping stone for the Group to realise its medium to long-term strategy, which is to diversify its property development exposure and venture into other global cities. Nevertheless, we proceeded to build on our sound
foundation, delivering a number of key development milestones during the year. We attribute these achievements to our past and present clear strategies, as well as the strong vision and firm values of our Group.

 

There were several notable achievements that we are proud to highlight, namely:

 

• The Group achieved actual Gross Sales value of RM355 million, which is a commendable sum, given the state of the current property market
• The Group’s ongoing property projects with a total gross development value (“GDV”) of RM1.05 billion have achieved more than 80% take-up rate
• A total of RM410 million in unbilled sales that will largely be recognised in the next financial year • Several remarkable acquisitions for Titijaya to achieve sustainable growth
• Maintained a robust balance sheet with a cash position of RM137 million, positioning the company in a prime position to seize new opportunities for external growth
• Another collaboration with Singapore’s The Ascott Ltd., the world’s largest serviced residence owner-operator

 

FYE2017 marked two distinct milestones for Titijaya – the collaboration with China’s CREC as well as our first venture into East Malaysia. As we reflect on our achievements and challenges, we are reminded of the strong core values that have become a part of Titijaya, in the way we behave and run the business. As we enter the next chapter for Titijaya, these values will be essential for us and function as our foundation in adapting to the ever-changing business landscape.

 

The property industry has been one of the most dynamic and competitive industries in the last few years. With a market that is constantly evolving, Titijaya is cognisant that we need to keep ourselves upbeat and understand the variables that have an impact on people’s needs and wants. After all, we are operating in an industry that primarily focuses on the requirements of the people – providing a home and designing it with the right environment which will enable them to live, work, and play comfortably within a safe and secure environment. At the same time, we strive to build homes that add value to the surrounding communities to create better appreciation values to their properties. Over the years, we have formed a good reputation within the industry, coupled with our strong track record in developing residential homes that are within the affordability of the majority.

 

PROPOSED ICPS
On 26 August 2016, the Group proposed to undertake a rights issue of Irredeemable Convertible Preference Shares (“ICPS”) of up to 614,999,899 ICPS on the basis of 3 ICPS for every 2 existing Titijaya’s shares held by our entitled shareholders. With a conversion period of 5 years, shareholders can opt for either 10 ICPS to be converted into 1 new Titijaya Share or a combination of 1 ICPS and cash payment of RM1.485 for 1 new Titijaya Share. This corporate exercise received excess applications of 623,913,944 ICPS, representing 101.45% or an oversubscription rate of 1.45% of the ICPS available for acceptances. The Group has raised a total of RM101.48 million.

 

BUSINESS AND OPERATIONAL STRATEGIES FOR FYE2018
The Malaysian economy in 2017 is expected to be positive and is largely affirmed on an improving global economy and continued growth in domestic demand. As such, the Malaysian economy is expected to grow by 4.7% – 5.2% in 2017 as compared to 4.2% in 2016. The supportive macroenvironment, although still susceptible to adverse shocks, should augur well for the Group’s prospects in the coming year.

 

The outlook for the Property Development business remains encouraging despite a still-challenging market, based on total unbilled sales of RM410 million and upcoming property launches in FYE2018 that is worth RM1.8 billion. Going forward, our business strategy shall align to synergistic strategic alliances, where we will scout for jointventure or land-swap project opportunities with reputable government agencies and other synergistic partners such as CREC and Bina Puri. This allows Titijaya to avoid a hefty payment for upfront land cost that will stretch the balance sheet, as well as provide flexibility for Titijaya in the development roll-out timeline. For example, our Riveria City @ KL Sentral is a joint venture project with Bina Puri and Prasarana, 3rdNvenue @ Embassy Row and The Shore @ Kota Kinabalu with CREC, Jalan Stonor Project with Lembaga Getah Malaysia, Bukit Bintang Project with Ministry of Education Malaysia, and Areca @ Batu Maung, Penang with Lembaga Kemajuan Ikan Malaysia. As Titijaya’s land cost/GDV ratio is well positioned at below the 12% threshold, this provides the flexibility for us to adjust the timing of our product offerings and a good buffer and margin of safety in maintaining our development margins.

 

APPRECIATION
It is never a person’s effort in making a company’s success. At Titijaya, I value the contribution from everyone. I would like to take this opportunity to thank all my staff for their continuous support to the group. Their hard work, dedication and determination have put Titijaya at where it is today.

 

I would also like to express my sincere gratitude and appreciation to our Chairman, my fellow directors and management for their trust and believe in the last one year. Without them, we would not be able to complete what we planned and what we desired.

 

To our valued shareholders, your continued support, confidence and trust in us are precious. We will continue to work hard to provide better shareholders value to everyone.