Hullo. In my last message (annual report 2008), I wrote “what a year it has been”. Not many would disagree when I repeat the same sentiments for this year; indeed what a year it has turned out to be. As I write this, there are numerous programmes on tv detailing the anniversary of the turmoil/ “melt-down”. And who can forget the huge downward moves in the stock markets all over the world in the earlier part of this year. And the subsequent relentless re-bound.
Authoritative persons talk of “green shoots of recovery”, analysts and commentators are voicing out how best for the governments to “retreat” their massive direct supports for the economy, and in fact The Reserve Bank of Australia has just started upping interest rates.
Everything goes in cycles. I recall the oil shock in early 70s, the downturn in the mid 80s, and the Asian financial crisis 97/98, and now this. Weak times pass, as surely as all booms fizzle out.
Operations Review
Yes, it has been a tough year; sales and net profits down. On the other hand, a few positives too: strong margins maintained, gearing stays low, healthy level of unbilled sales (approximately RM200m).
On a wider platform, our nation has learnt well the lesson of 97/98, banks remain strong and minimal news of financially distressed companies. Building materials prices have stabilized, and we are not in a overbuilt situation, especially in Penang.
To reflect both a lower profit and share price, your Board has recommended that we maintain the final dividend, while the interim dividend which we have been paying out for the past 2 years be in abeyance. Dividend policy is a function of both our profits as well as decent yield to the share price.
There were 2 distinct “phases” for fiscal 2009; the 1st was for quarters 1 through 3, where things were not positive. Quarter 4 was a different story; the concerted efforts by the governments around the world to stimulate the economy resulted in restoring much needed confidence. This was evident for Hunza Properties Berhad (“HPB”) in the form of increase in sales.
And this has continued until now; hopefully it will continue. World-wide pump-priming and quantitative-easing by governments, historical low interest rates, relatively low local unemployment, a growing population, and no significant overbuilt are strong factors to spur growth.
Construction wise, “Infinity” is progressing well, on schedule. Indeed, “Infinity” is our pinnacle, which we will benchmark our future projects. This is our 1st 5star development; work progresses smoothly, sales are strong and margins are quite fat. “Gurney Paragon” was beset by issues (of which you would have read about in our public announcements). We have been working hard and smart to overcome them, and we expect the pace of construction work to pick up significantly. More so when we have re-activated our wholly-owned construction arm, Masuka Bina, to be the main contractor. In doing so, not only will we be keeping this profit within the Group, but just as important, we will be able to directly control the whole aspect of operations (quality, work schedule, safety etc).
Going Forward
This is the 10th time I am penning an annual message after the listing of HPB on Bursa. I recall, over the years, writing about -
• the need of when to be bullish (tekan minyak) and when to step on the brakes,
• people, people, people – our staff/talents and our happy, delighted residents/purchasers,
• develop the right product at the right price, giving good value to purchasers,
• profitable through careful design, planning and execution,
• Malaysia, being a growing country in terms of population, has needs of supply of a sizeable amount of new
housing units every year,
• the importance of overseas marketing,
• our corporate “blood/DNA” to contribute to our society,
• a must to know the industry well,
• continue to do what we have always done best - work hard and smart,
• continuing yearly good performances with increasing profits, with decent returns on equity and dividends,
all the while being guided by our Corporate Mission and Core Values.
Principles are to be held firm. In downturns, in boom-times. 始终如一，坚持不渝。
In our Quarter 4 announcement dated Aug 24, it was mentioned that HPB may consider proceeding with the implementation of the Rights Issue with Warrants at an appropriate timing (taking into account the interest of our shareholders at large). You would most probably have read our announcement dated Oct 21 on this matter; yes, we are proceeding with this exercise, and yes, we believe that this is in the best interest for HPB, and also for you, the shareholders. It has been put together to be a win-win for the Group and shareholders; for the latter, likely that the “sweeteners” come in the form of a not insignificant discount to the theoretical ex-all price, as well as free warrants that you will be receiving, should you subscribe to the rights shares. We trust that this exercise would be just as well, if not better, received than our previous one in FY 2004, which was oversubscribed by 30+%.
谢谢！As usual, I end by thanking everyone who has contributed to the continued success of HPB. I exhort you shareholders datang-lah beramai-ramai to our forthcoming AGM; it will be good to meet up, to exchange views, share opinions.
Warmest regards,
