IGB expertise may
reach Mid-East shores
By Chong Jin Hun
PROPERTY developer IGB Corp Bhd's expansion abroad may see the group
exporting its expertise to the Middle East and establishing more
hotels within South-East Asia.
IGB's prospects are also
no less exciting in Malaysia, as the developer of the iconic Mid
Valley City (MVC) along Kuala Lumpur's Federal Highway, will launch
MVC's luxury component known as "The Gardens" on September 26.
David McCracken, chief executive of Mid Valley City Gardens Sdn Bhd,
a wholly-owned unit of IGB, said the group is in talks with
potential joint-venture partners in the Middle East.
McCracken said IGB, also a hotelier, is keen on tapping the budget-traveller
segment in South-East Asia by setting up three and four-star hotels
in the region. The segment is lucrative by virtue of the growth of
budget airlines globally.
"We are working on some joint ventures in the Middle East. At the
moment, we are in the early stages of the job and getting to know
the people we want to work with," McCracken told Business Times in
Kuala Lumpur yesterday.
"In South-East Asia, we will continue looking at projects with
probably a core mid-market appeal. Generally, we will be working on
three or four-star hotels in East Malaysia, Thailand and China,"
He declined to specify details on IGB's ventures abroad, including
the nature and timing of its foreign initiatives, and its overseas
operations' contribution to the group's overall earnings.
IGB's hotel division chief executive Tan Boon Lee had told Business
Times last year that the company planned to expand its hospitality
business to Thailand, Macau, Vietnam, Australia and Europe.
On The Gardens, a RM1.5 billion job on some 4ha of freehold land,
McCracken said the entire project, comprising a retail portion, two
office towers and two five-star hotels, will be leased out.
Three quarters of the 800,000 sq ft net lettable retail area have
been taken up so far. The company will start promoting its office
space in the third quarter of 2007.
Based on IGB's management guidance, OSK Securities Sdn Bhd
investment analyst Mervin Chow said The Gardens can fetch an average
monthly rental of some RM9.60 a sq ft, a 47 per cent discount to the
RM18 a sq ft in the Kuala Lumpur City Centre.
"Rentals from The Gardens will offer IGB a steady cash flow," Chow
said. OSK has recommended a "buy" call for IGB shares with a
12-month target price of RM2.78 based on the property developer's
revised net asset value.
IGB shares added 3 per cent or 8 sen to RM2.40 at Bursa Malaysia
yesterday with 6.2 million units traded. IGB securities has gained
33 per cent so far this year, outperforming the broader market's 10
per cent rise.
MVC, upon completion, is expected to have some 18 million sq ft in
built- up area on a 20ha site. Construction of the project started
in 1995, and is due for completion by 2010.
IGB's net profit grew 29 per cent to RM135.9 million or 9.36 sen a
share while revenue rose 17 per cent to RM722 million in the
financial year to December 2006.