IJM Corp plans to invest in property

SUBANG JAYA: IJM Corp Bhd, whose shareholders approved the proposed privatisation of IJM Land Bhd, looks at ramping up property investment to enhance recurring income contributions, said IJM Corp CEO and managing director Datuk Teh Kean Ming.
"Property is very cyclical. Our strategy is to go into property investment to have recurring income. During down time, the recurring income will cushion some of the impact from property development," he told reporters after its EGM yesterday.
Teh said the property investment business will only involve its own developments and the group is not looking to buy established assets to set up a real estate investment trust (REIT). However, he did not discount the possibility of setting up a REIT in the longer term.
IJM Land CEO and managing director Datuk Soam Heng Choon said IJM Land currently has 4,900 acres of undeveloped land with a gross development value of RM30 billion.
"With the landbank that we have, last time we were very focused on doing just property development. We are not very much involved in property investment. We have built some shopping complexes and offices and then we actually sell it off once the yield and capital value increase.
"But with the stronger balance sheet that we have (post privatisation), we can re-strategise our business. We could probably start another sector on property investment to leverage on the yield income rather than just doing purely property development," he said.
Some of the commercial developments that it is involved in include Phase 2 of The Light in Penang comprising 100 acres of commercial land with components such as a shopping complex, hotels and offices.
"We are still a property developer, we are not a property investor. We are not slowing down with our launches. In fact post privatisation, we can accelerate if the market permits," said Soam.
For the financial year ending March 31, 2015 (FY15), the group planned RM3 billion worth of launches of which RM2 billion has already been launched. For FY16, Soam said it plans to continue launches within ongoing projects, such as Phase 2 of The Light, Phase 5 of Bandar Rimbayu as well as three projects in Johor.
On its construction business, Teh said the group is set to end FY15 with a record orderbook of RM7 billion, which will keep the group busy for three to four years. Its current outstanding orderbook is over RM6 billion, excluding the impending award of the Kuantan mega port project of RM1 billion.
Yesterday, IJM Corp shareholders unanimously approved the proposed privatisation of IJM Land to be undertaken by way of a members' scheme of arrangement.
The group will seek IJM Land shareholders' approval in February and obtain the court order in March. The group expects to complete the exercise by April.
Post privatisation, the group expects to take on larger scale projects by leveraging on its stronger financial position and resources within the group.