Selangor Dredging focusing on clearing inventory

27 Aug 2019 / 13:31 H.

KUALA LUMPUR: Selangor Dredging Bhd (SDB) will focus on clearing its inventory for the time being without any planned launches amid weak property sector.

“At this point of time we do not have any launches planned, and what we want to be doing is to clear everything,” its managing director Teh Lip Kim said at a media briefing after the group’s AGM today.

Despite having achieved 95% inventory sold for some of its development projects, SDB is cautious on the property sector.

“Malaysia’s property sector is picking up at a slow rate due to challenging market conditions coupled with consumers’ cautious spending habits from the increased cost of living, as well as firmer bank policies,” said group chairman Eddy Chieng Ing Huong.

SDB declined to disclose the total inventory value, but its current unsold properties are valued at RM111 million.

Meanwhile, its unbilled sales for ongoing projects in Malaysia and Singapore stand at RM241.9 million.

Teh highlighted that the difficulties for prospective property buyers to secure financing is a major hurdle for the group.

“Our wish would be for the banks to be less restrictive when it comes to home financing, as we and the banks have to work together.”

Speaking of its hotel business, she said the refurbishment efforts have started to pay off as the group managed to achieve a 60% occupancy rate this month.

For the last financial year ended March 31, 2019 its sole hotel property, Hotel Maya saw a reduced occupancy rate of 38% due to refurbishment efforts.

Despite the improving results for the hotel segment, Teh expressed caution for the outlook ahead.

“In view of so many AirBnb apartments coming up, there is a lack of an upside for the average room rate as there is a lot of competition,” she said.

On a separate note, SDB’s 37%-owned Singapore-listed Fortress Mineral Ltd aims to bump up the iron ore production to 30,000 metric tons (mt) per month from this month onwards.

Currently, its mine in Bukit Besi, Terengganu produces 20,000 mt of high grade Fe 65 standard iron ore per month with a maximum production capacity of 50,000 mt.

“Basically, for us at the moment, we are pushing as much output as possible for the mining sector,” said Teh, adding that the higher production is attributed to improved efficiency in its processing facility.

SDB group general manager Loong Ching Hong said the current price for the high grade Fe 65 is around US$95 per mt.

“Whereas our cost of production is typically about US$40 per mt, therefore our margins is roughly 50-60% per mt.”

Aside from Malaysia, Brazil is the main producer of the Fe 65 iron ore and the Vale Dam disaster in February this year have severely reduced the production of the ore, thus driving the prices up.

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