Ewein Bhd, which is currently jointly developing the RM800 million City of Dreams condominium project in Bandar Tanjong Pinang, Penang with Consortium Zenith BUCG Sdn Bhd (CZBUCG), is set to bag its second project on the island by the end of the year.

“Right now, we are finalising and fine-tuning the [contract] terms [to develop] the next parcel of land [in Bandar Tanjong Pinang] with CZBUCG, and hope to make an announcement by year end,” its deputy chairman and group managing director Datuk Ewe Swee Kheng told The Edge Financial Daily in an interview last week.

In June, it incorporated a new 60%-owned subsidiary, Ewein Zenith II Sdn Bhd, in anticipation of winning the contract. The remaining 40% stake in Ewein Zenith II will be held by CZBUCG.

Ewe said Ewein is proposing to develop three blocks of luxury serviced apartments on the 4.4252-acre (1.79ha) piece of freehold land, which will have a gross development value (GDV) of RM1 billion.

To be called City of Dreams II, the serviced apartments will comprise 891 units, but with smaller built-ups than that of City of Dreams, he said.

“Nevertheless, this is subject to the finalisation of the second parcel of land,” said Ewe.

Meanwhile, Ewein will start to see contributions from the City of Dreams project to its profit for the third quarter ended Sept 30, 2015 (3QFY15), based on its 60% share of the joint venture with CZBUCG, which owns the remaining 40%. It is due to announce the results of the quarter in the second week of this month.

“We have started progress billing for road and drainage works serving the project. We expect the project to gain momentum from 4QFY15,” said Ewe.

“The development is expected to contribute RM200 million in profit before tax and minority interests over the next four years,” he said.

Ewein saw its 2QFY15 net profit jump 88.1% to RM521,000 from RM277,000 in 2QFY14. Revenue, however, fell by a marginal 1.48% to RM10.55 million from RM10.71 million a year ago.

Ewe said the group had received overwhelming responses to the City of Dreams condominium project, receiving 1,203 applications for the 572 units available.

“We are in the progress of qualifying these applications, and hopefully will be able to sign some of the SPAs (sale and purchase agreements) by the end of this year,” he added.

City of Dreams features two blocks of 40-storey towers housing a total of 572 condominium units, with built-ups ranging from 1,100 sq ft to 2,350 sq ft.

Sitting on a 3.67-acre piece of freehold land, the seafront units are priced from RM1,172 per sq ft (psf), which is relatively lower than Eastern & Oriental Bhd’s high-end condominiums in Seri Tanjung Pinang nearby, which are going for RM1,800 psf.

City of Dreams and City of Dreams II are part of a proposed development measuring 50 acres to be known as Wellness City of Dreams, which will have a GDV of RM13.89 billion. The proposed project is expected to comprise, among others, a wellness resort, retirement and nursing residential suites, and serviced apartments.

While property development will contribute “significantly” to the group’s pre-tax profit from FY16, Ewe said the group had no intentions of ending its manufacturing of precision sheet metal fabricated parts business.

“We can still remain profitable in the manufacturing segment. While profit growth rates may be flat, but in times like these (lower demand from the electronics and electrical sector), I think we are considered good to be able to remain profitable,” he remarked.

On its property investment business, Ewe said rental income from Menara IJM Land in Penang provides the group recurring income on an annual basis. The group acquired the property in 2011 for RM50 million.

Ewe said contributions from this segment are expected to increase in the coming years from a revision of rental rates.

Year to date, Ewein’s (fundamental: 0.95; valuation: 1.4) share price has risen 109.78% to close at 96.5 sen last Friday, up 7.5 sen or 8.43% higher from the previous day’s closing. Its market capitalisation stood at RM186.68 million.

Source: TheEdgeMarkets.com