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Monday, May 25, 2015

Tiger Synergy sees earnings boost in FY16 (Edge)

KUALA LUMPUR: Tiger Synergy Bhd, which returned to the black last financial year 2014 with a small profit of RM132,000, expects a big boost in earnings from the financial year ending June 30, 2016 (FY16), helped by cost-saving initiatives.

However, before this happens, the property development and construction group will still likely close this FY15 with a small profit or could dip into the red again as most of its development properties have been recognised in the previous financial periods and new projects have not been started yet, said its managing director and major shareholder Datuk William Tan Wei Lian. Tan owns 22.15% of Tiger Synergy as at March 31, 2015.

The group had recently embarked on setting up a RM2 million cement plant in Shah Alam, Selangor for the production of 400 cu m of ready mix concrete, as part of its cost reduction initiative. The new plant will commence operations in two months’ time.

“Cement is one of the major cost components of our property development segment. By setting up our own plant, we can save up to 20% on our raw materials, labour and logistic costs,” Tan told The Edge Financial Daily in an interview.

Additionally, construction work is undertaken by its construction arm, Pembinaan Terasia Sdn Bhd.

“We do everything on our own unlike some developers who have to tender their construction projects to third party companies,” said Tan.

Tiger Synergy has four property developments in Selangor in the pipeline, with a combined gross development value (GDV) of RM550 million. They comprised residential projects in Bukit Serdang, Seri Kembangan, Taman Rowther in Gombak and Alam Impian in Shah Alam.

Tan said the group will launch these projects in phases over the next three years.

He is confident that the projects will be well-received due to their strategic location within a 20km radius of Kuala Lumpur. ..

With these cost savings strategies in place, Tiger Synergy expects to net RM160 million in profit, which is 30% of the total GDV of the four projects, over the next three financial years.

“In other words, the group would be able to realise RM50 million in net profit for each financial year (from FY16),” he added.

For FY14, Tiger Synergy booked a net profit of RM132,000 compared with a net loss of RM1.71 million in FY13. This was achieved despite revenue falling by 63.1% to RM12.59 million from RM34.12 million.

For the six months period ended Dec 31, 2014 (1HFY15), Tiger Synergy however swung back to a net loss of RM877,000 compared with a net profit of RM1.13 million, blaming higher administrative costs and completion of existing projects.

Going forward, Tan said the group will remain focused on the domestic property market and will continue to be on the lookout for further strategic land banking acquisitions in Kuala Lumpur and Penang.

He noted that the group still has 15 acres (6.07ha) of land in Kuala Lumpur yet to be developed. ..

On its ongoing private placement exercise, Tan said the group has identified several “potential investors” for the placement and will place the shares out soon.

On Jan 29, 2015, Tiger Synergy had proposed to undertake a private placement of 138.29 million shares or up to 10% of its issued share capital to third party investors to raise up to RM27.66 million for working capital, property development expenditure and estimated expenses.

Shares in Tiger Synergy (fundamental: 1.2; valuation: 0.9) closed unchanged at 11 sen last Friday, for a market capitalisation of RM87.91 million. The stock has fallen by 21.4% year-to-date.

1 comment: said...

Intrinsically, Kuala Lumpur is something unfortunate for economics!Discretion of it has been suppressed for a long time - maybe it is a reason?