Hunza Properties Berhad: Corporate Information

Greetings. What a year it has been. Just when financial news were trumpeting that economic boom-bust cycles have been tamed, that central banks have mastered the art of managing the economy to ensure perpetual growth, and all these reflected in historic highs for everything from shares, commodities, bonuses and even a cup of kopi-oh, crash, bang. And everything falls down.

At the time of writing this, governments worldwide have announced massive financial support and aid, to the extent of nationalization of financial institutions. Already forecasts of a muted worldwide economic growth, distinctly opposed to the above trend growth in the immediate past, is the prediction by many for the near future. Our nearest neighbour to the south is now in a technical recession.

Operations Review
Our Hunza continue to record a set of sterling results. Highest ever net profits of RM 48+million, highest ever total shareholders’ fund of RM 300+million. Our ROE (return on equity) remains strong. Our gearing ratio, net cash, is about 25%, a very healthy level.

To reflect our strong results, and to reward our shareholders, we have paid out an interim dividend in July. Your Board has proposed a final dividend, which upon your approval at our forthcoming AGM, will be paid in January 2009.

We attribute this strong showing to the on-going projects (Gurney Paragon and Infinity), as well as Alila and Mutiara Seputeh (2 projects completed or near completion) which cater to the higher end and foreign purchasers. But no matter which segment of the market that we are working on at any particular juncture, all our products deliver value to the end-buyers.

We must know the industry well; for example, in the past year, it is by design that we have launched our high-end projects, rather than say, average, mid-range projects. Not only this, but our projects are also designed with foreign purchasers in mind. To follow this analysis a bit deeper; sebelum kita boleh mencapai keputusan yang memuaskan marketing to warga asing, kita mesti mengenal pasti apakah keperluan mereka. We must also know in which countries such demand is coming from, and more importantly, how to reach them. We have these capabilities, because we have been cultivating and learning this aspect for quite some time now. I recall writing on marketing to foreign markets back in my 2005 statement.

But in spite of these positives, we must acknowledge that the market rout has not spared our Hunza. Our share price too was at a historic high not too long ago, and alas it too has come down a fair bit. In the next 2 years or so, which will be difficult times, we shall see “in strong winds, which trees have deep roots, and in long distances, which horse is stronger and has more stamina” as the Chinese proverb says ，“路遙知馬力、“疾風知勁草”、. I am of the opinion that our Hunza is deep-rooted and strong, and will seize opportunities that surfaces during trying times.

To this end, we remain constantly engaging the investment community. We have our twice yearly roadshows (upon announcements of mid and year-end results), make road trips to meet fund managers overseas, participate in Bursa’s research scheme, hosts visits by analysts, fund managers and investors.This will help ensure that when the markets come back, as they surely will, Hunza is well poised to derive optimum benefits.

Doing Our Part for Society
We must continue to do our part to assist those less fortunate, to contribute to our society. Our Hunza made numerous gifts, one of which is a RM 1million donation to Penang Han Chiang Associated Chinese Schools Association Development Fund. Everyone acknowledges the importance of education, more so when we as a nation continue to climb up the economic ladder. We do our part to ensure education continues to be readily available to all.

Going Forward
As noted in our most recent quarterly reports, property sales have slowed down due to depressed global economic outlook, as well as uncertainty in national environment. We maintain our view that strong growth will only re-emerge when the global and local uncertainties are addressed; we believe that the concerted efforts by central bankers of the biggest economies present a good foundation to bring back confidence. Granted, it will be a long and hard process.

In the meantime, we continue to do what we have always done best; work hard and smart.

For example, we will only begin physical construction of the mall component of Gurney Paragon project when prices for building materials come down to saner levels. We are on the look-out to acquire land; already offers to sell land at reasonable prices are surfacing.

You may have read about the approval by the Securities Commission to our application to extend our Proposed renounceable rights issue, together with free detachable 5-year warrants. CIMB are advising us, and you can follow developments on this subject matter in our public announcements.

As mentioned earlier, our gearing ratio is at a very manageable level. This enables us to tap bank loans to fund opportunities.

AGM, terima kasih
As usual, saya mengakhiri dengan mengucapkan terima kasih kepada semua who have played their part in Hunza’s well being and growth. We had a decent turnout at last year’s AGM. I trust we will have a bigger "family" gathering this year. See you then.