By: CHERYL POO

Wong says over the next two years, between RM300mil and RM400mil will be set aside to buy land in the Klang Valley, Penang and Kota Kinabalu.

Kulai land buy enables it to venture into Johor township development efficiently

PETALING JAYA: Ho Hup Construction Co Bhd is planning to move into township development in Johor in an inexpensive way without having to tie up much capital.

To recap, the small-cap construction and property developer plans to acquire a 70% stake in Intact Corporate Approach Sdn Bhd (ICA) from I4G Intelliganz Sdn Bhd for RM107.3mil.

ICA is a two-year-old owner and developer of real estate, which operates as a subsidiary of I4G Intelliganz.

In July, ICA had signed a deal with YPJ Plantations Sdn Bhd – the registered land owner – to buy 429 acres in Kulai for RM107.3mil, where it would be transferred progressively to ICA over five years

In return for buying the land, ICA will have to built a technical and vocational education and training facility to be built over five years at ICA’s own cost. The facility would be located within the Yayasan Pelajaran Johor Academic City near Kulai Town.

On Ho Hup’s part there will be a cash outlay of RM22.3mil as well as RM85mil in construction and delivery of Skills Johor.

Skills Johor will be the country’s first technical and vocational skills training hub, built over 40ha in the district of Kota Tinggi and is expected to catalyse development in the surrounding areas.

The state government will have a 20% share in the joint venture to operate Skills Johor as well as gain income from the leasing the land for the hub, of which first phase is slated to be ready and operational in two years.

While Ho Hup’s plans are still pending shareholders approval, the company has kept busy and is looking out for more projects since its early exit from PN17 status last year.

Ho Hup chief executive officer Derek Wong Kit-Leong said that over the next two years, between RM300mil and RM400mil would be set aside to buy land in the Klang Valley, Penang and Kota Kinabalu.

These projects would focus on hybrid development, similar to its 10-acre mixed commercial development Aurora Place @ Bukit Jalil. The RM1.1bil-gross development value project has sold out, save for an 18-storey office block which will be kept for recurring income.

For the second quarter ended June 30, 2015, Ho Hup posted a net profit of RM14.2mil, down 17.6% from RM17mil last year.

Revenue was RM61.6mil, down 30% from RM88.5mil last year.

For its construction division, revenue was lower mainly due to the near completion of its Kem Askar Johor and Karbala Project in Iraq, while the lower revenue in the property development division was due to its Aurora Place’ being at a stage which required a lower contribution pace, Ho Hup said in a filing with Bursa Malaysia.

On Friday, shares of Ho Hup dipped two sen to 80 sen, its lowest point this year after tumbling down from RM1.53 on April 13, the stock’s highest in 2015.