SYF targets dividends by 2017

KUALA LUMPUR: SYF Resources Bhd, which is looking to launch property projects with a total gross development value of RM500 million in Sungai Long and Semenyih in the next three to four years, plans to start paying out dividends again by 2017 at the earliest.
The furniture manufacturer last paid dividends a decade ago. SYF ventured into the property development business in 2012.
"We feel our first objective is to bring up the numbers to a respectable level. To do that, we've to plough in a lot of cash and that means we have to sacrifice the dividend," said SYF executive director Cheong Yee Kiong.

"If we pay dividend, we have to borrow. If we borrow, our gearing goes up and it eats into our profits. We feel the right time is not now. When we don't have to grow so fast anymore and we have a certain level of earnings, then we can allocate some of the cash resources for dividend," he explained.
Executive director Datuk Seri Chee Hong Leong said for this year alone it plans to launch two projects in Sungai Long, which will have a GDV of RM100 million each.
SYF's unbilled sales currently stands at RM200 million.
"We're looking at RM500 million of GDV coming in from the property side, or about RM100 million a year. We've sufficient landbank to generate profits that we think are sustainable and we're looking at double-digit growth for the next few years," Chee told a press conference after its AGM here yesterday.
For the financial year ended July 31, 2015 (FY15), property development made up about 26% of SYF's revenue, while rubberwood furniture contributed the bulk of its revenue at 64%.
"For 2016, property will be driving the business but in the long run, we still see manufacturing as the stability factor," Chee said.
However, he cautioned that the property sector can be cyclical but added that SYF is here for the next few years and the property sector would have improved by 2018 or 2019.
"For the next four to five years, our property side will be quite stable and demand in the location that we're selling is not going to drop," said Chee.

SYF is focused in the areas of Sungai Long, Semenyih, Kajang and Cheras, with a preference for undertaking property development projects on a joint-venture basis.

"SYF is trying to be lean in the purchase of properties so that we do not gear up," said Chee, adding that the group has a gearing of 0.4 times.