Sanichi to gain RM40m from maiden property foray

by **Cals** Wed 21 Jan 2015, 02:49

Sanichi to gain RM40m from maiden property foray

By Chester Tay / The Edge Financial Daily | January 20, 2015 : 9:37 AM MYT

KUALA LUMPUR: ACE Market-listed Sanichi Technology Bhd is expected to reap a pre-tax gain of RM40 million from its maiden mixed-use property development in Klebang, Melaka, which will be launched in March.

“This is simply by subtracting the project’s GDV (gross development value) and its development cost,” its managing director Datuk Dr Jacky Pang Chow Huat told The Edge Financial Daily in a phone interview yesterday.

Dubbed “Marina Point”, the project features 352 small office/home office (SoHo) units and 120 retail units, with a total GDV of almost RM170 million.

“Showroom units are currently under construction and are expected to be completed by the end of next month,” said Pang, adding that the project will contribute “significantly” to the group’s earnings by 2015/16.

Sanichi, a precision plastic injection mould maker, last year ventured into property development.

For its first financial quarter ended Sept 30, 2014 (1QFY15), Sanichi (fundamental: 1.95; valuation: 1.2) saw its net profit shrink to RM589,000 from RM1.83 million a year ago; while revenue fell 28.2% to RM4.9 million from RM6.82 million in 1QFY14.

Despite a slowing property market, Pang is confident that Marina Point will attract foreign buyers mainly due to lower foreign property ownership barriers in the state and the weaker ringgit.

“I think it is the Klang Valley and Johor Baru (property markets) that are slowing down, not Melaka’s. The minimum entry point for foreign ownership is still RM500,000, and coupled with the weakening ringgit, our property project becomes cheaper for them [foreigners to buy],” he said.

Pang said Sanichi had engaged CBD Properties Sdn Bhd to market the project in Singapore and Hong Kong, forecasting equal ownership from foreign and local buyers at Marina Point Melaka.

Going forward, he said the group is keen on acquiring affordable suburban land around the Klang Valley.

As at Sept 30, 2014, Sanichi’s cash position stood at RM57.4 million.

Apart from land acquisitions, Pang said the money will also serve to expand its plastic business albeit on a segmental basis. He foresees property development will contribute about 80% of Sanichi’s revenue in the future. Pang has been accumulating shares in the group since October last year. As at Jan 6, 2015, he had a 3.28% stake in the group.

“As long as there are people willing to sell, I am willing to buy. Shareholders are confident of the company, so am I,” he said.

The group’s largest shareholder is currently Pelaburan Mara Bhd with a 15.33% stake, followed by Mah Wee Hian @ Mah Siew Kung who owns 10.4%, according to filings with Bursa Malaysia.

Sanichi shares closed up one sen or 11.11% to 10 sen yesterday, with 15.29 million shares transacted, giving it a market capitalisation of RM91.25 million.