Jiankun expects to be back in the black in FY17

KUALA LUMPUR: Jiankun International Bhd expects to return to the black in the current financial year ending Dec 31, 2017 (FY17), driven by its two property projects Bayu Heights 2 at Serdang and Amani Residences at Bandar Puteri Puchong, said COO Lim Ching Choy.
For the first quarter ended March 31, 2017, the company saw a turnaround with a net profit of RM392,000 compared with a net loss of RM262,000 a year ago. Its revenue also more than doubled to RM7.96 million compared with RM3.73 million in the previous corresponding quarter. Jiankun has been incurring losses in the last three financial years.
“For 2017, we expect the company to turn around. We’re positive that in Q1 we have turned around the company. By 2017, we’re at a profitable track,” he told a press conference after its AGM yesterday.
Bayu Heights 2 at Serdang consists of 84 units of three-storey terrace houses on a 6-acres land with a gross development value (GDV) of RM70.2 million. Lim said it has sold 82 units and hopes to sell the remaining two units by this month. He added that construction has reached 30% and aims to reach 65% by year-end. The project is expected to complete by end of next year.
Amani Residences at Bandar Puteri Puchong consists of 377 units of serviced apartments on a two acre land with a GDV of RM209 million. It has sold over 200 units and hopes to complete the sale for the development by end of September. Construction is expected to reach 20% by end-July and fully completed within three years from next year.
It hopes to secure another two new landed property projects this year in the Klang Valley.
“Going forward, with the two projects sold, we’re looking for more land to acquire or JV (joint venture), mainly in Selangor. This is mainly for landed residential property development. We’re also looking for land for semi-D factory,” said Lim, adding that it prefers JV as it tries to minimise the outflow of funds for land acquisition, so that it uses the majority of its working capital for property development.
He explained that Jiankun wants to position itself as a boutique property development company, specialising in landed property, pocket-sized development and fast turnaround. In terms of fast turnaround, he said Jiankun expects to launch a project within a year after land acquisition and to complete a landed property within two years.
“We target landed property because (the speed of) construction is faster. Terrace houses can be completed within 12-15 months. So within 24 months we can ‘retire’ the gearing. We do what the market wants,” said Lim. Its gearing ratio stood at 70%.
At this current challenging market conditions, he said Jiankun will focus on what it does best (property development), instead of a diversification.
“We don’t have a lot of burden, the two projects is almost there, and once it’s there we go for another two more projects. Our model is we finish two (projects), and buy another two (projects). So that our gearing is manageable, our profit is constant and for risk and cash flow management. Today, with financial institutions becoming stringent in lending, we have to walk one step at a time,” said Lim.
Jainkun typically targets the medium-class property upgraders, with landed properties priced at a range of RM700,000-RM800,000 in urban Kepong, Serdang and high density areas as well as RM500,000 landed properties in suburbs like Rawang.
Meanwhile, Jiankun’s 14 units of properties in Huizhou, Huiyang, China are partially rented out and it hopes to fully rent out the units before finding a buyer to dispose off the properties in the future. The investment properties brought in comprehensive income of RM900,000 in FY16.
“Once the China market recovers fully, once we can find a buyer, we will sell the properties and bring back the money to do Malaysian projects,” said Lim.