Melati Ehsan back in the news after winning RM297mil housing contract

Tuesday, 08 November 2011 21:23

PETALING JAYA: Low profile turnkey contractor Melati Ehsan Holdings Bhd is in the limelight again, this time for bagging a RM297mil contract to design and build residential flats for the Housing and Local Government Ministry’s People’s Housing Programme (PPR).

Melati Ehsan was also in the news recently when it was reported that the company’s massive RM1.62bil property development project with the Selangor State Development Authority (PKNS) in Kelana Jaya, Petaling Jaya (that will see it redeveloping the PKNS Sports Complex) would likely go ahead despite opposing views from the residents in the area.

Little details have been provided about the RM297mil contract from PPR. The company said the contract had been awarded to its wholly-owned subsidiary, Pembinaan Kery Sdn Bhd, and that it had just received the letter of award. It said the contract would be split into two portions, with one part valued at RM82.1mil for the provision of 500 units of flats, while the remainder 1,600 units of flats would be built for RM215.9mil. The company also revealed that the properties would be built in Kuala Lumpur but with no further details of the locations.

Going by the numbers revealed by Melati Ehsan in the announcement, it seems that it will be building the flats for between RM135,000 and RM164,000. The flats are expected to be completed earliest by 2014, assuming that the construction stays on its stipulated time line of completion of 30 months and 36 months respectively. Melati Ehsan has yet to reply to questions from Starbiz for details on this new award.

Melati Ehsan’s joint venture with PKNS is to redevelop the PKNS Sports Complex, which is 30 years old, and includes a field, six tennis courts and a clubhouse. The planned development by Melati Eshan and PKNS is a RM1.62bil sports-themed mixed development, with five 35-storey apartment blocks, two 15-storey business complexes, a performing arts centre and an integrated sporting hub.

The company is helmed by managing director Tan Sri Yap Suan Chee, who has an indirect stake of 49.74% in the company. Melati Ehsan, which was listed in 2007, had completed mainly infrastructure construction projects like the Trans Eastern Kedah Interland Highway for RM287mil, and also two Carrefour hypermarkets in Kota Damansara and Bandar Tun Hussein Onn.

Its other substantial shareholders include the country’s pilgrims fund board, Lembaga Tabung Haji, which has a direct 7.28% stake in the company, and according to its 2010 annual report, Melati Ehsan’s 30 largest shareholders collectively own 89.54% of the company.

It is also involved in several ongoing residential housing projects in the Klang Valley, namely in Bukit Tengku, Bukit Jalil and also a mixed development in Pandamaran, Klang, which will comprise 501 units of residential houses and 320 shoplots, along with commercial areas covering 8.97 acres and industrial areas covering 6.92 acres. It has also completed housing projects in Kota Damansara, namely Bayu Perdana 2 and Bayu Damansara. In Johor, it has completed several phases of its development named Taman Ehsan Jaya and is still busy with the mixed development which comprises over 5,000 units of residential and commercial units.

Listed at an initial public offering (IPO) price of RM1.28, the counter has not touched its IPO price since June 2008. Although still profitable, its earnings have been seen a slight decline. For its year ended Aug 31, 2011 (FY11), the company recorded a net profit of RM6.1mil on the back of RM86.55mil in revenue, while for FY10, FY09 and FY08, it had recorded net profit of RM5.47mil, RM12.69mil and RM18.9mil respectively.

The company had cash balance of RM34.61mil as at the August 31, 2011 and its share price had been trading at the 80 sen range, below its net tangible asset of RM1.21.

With a current market capitalisation of RM96mil, it is interesting to note that the recent contract it has secured is more than two times its market value.

From The Star