E&O set for better times ahead; new launches expected this year

E&O set up the sukuk programme primarily to finance the costs of land reclamation, infrastructure, and development for STP2.

Kok said that STP2A is progressing well and the maiden property launch is expected next year.

STP2A has been fully reclaimed and infrastructure works are on-going, he said.

Reclamation of STP2A started in 2016 and the development is the key driver for the group.

STP2A is expected to have a gross development value of more than RM17 billion and will be developed over 15 years.

E&O's flagship development of STP Phase One (STP1) and Penang island's first master planned seafront development is 99 per cent sold despite the challenging conditions.

Driving the group forward

Kok said E&O is implementing several cost-containment measures and is focusing on optimising operations to ensure better performance in the coming quarters.

He said the current time is being used to prepare the group for the post-movement control order (MCO) recovery and to welcome the government stimulus measures to gain traction.

"Never in our lifetime have we faced a crisis that so severely affects both lives and livelihoods," he said in a filing with Bursa Malaysia on Monday.

"By continually reviewing and refining our development concepts and products, and keeping a close watch on evolving conditions that bode well for relevant launches, I believe E&O is positively prepared and positioned to respond and further leverage on the property brand we have so successfully built," he said.

E&O posted total revenue of RM486.8 million for the financial year ended March 31, 2020 (FY2020), as compared to RM886.3 million recorded in FY2019, representing a decrease of RM399.5 million or 45.1 per cent.

It registered a pre-tax loss of RM155.6 million for FY2020 as compared to a pre-tax profit of RM161.9 million in FY2019, which was a decrease of RM317.5 million or 196.1 per cent.

E&O said the pre-tax loss in FY2020 was largely due to the impairment losses of RM209.6 million recognised on the group's assets and properties.

The group's results were also lower across the board, given that the hospitality industry and premium property development sector in which it operates, were hit hard, in the face of an unprecedented period of disruption and uncertainty following the sharp and sudden fallout of the global Covid-19 pandemic.

The property segment recorded a revenue of RM418.4 million in FY2020 as compared to RM798.9 million in FY2019, representing a decrease of RM380.5 million or 47.6 per cent.

E&O said the lower revenue was mainly due to lower revenue recognition from projects in STP1, namely The Tamarind and Ariza Seafront Terraces which were completed in the previous financial year, and lower revenue recognition from the land reclamation in STP2A.

The group's joint venture projects namely, The Mews, Conlay, and Avira Garden Terraces, contributed a total revenue of RM90 million in FY2020 as compared to revenue of RM86.5 million in FY2019.

The segment posted an operating loss of RM47.2 million for FY2020 as compared to the operating profit of RM315.3 million in FY2019, representing a decrease of RM362.5 million or 115 per cent.

E&O said the Covid-19 pandemic, which led to the implementation of the movement control order (MCO) on March 18, 2020, resulted in lower property sales in the final quarter of FY2020 and critically impacted the market value of the properties.

The segment had recognised an impairment loss of RM190.1 million on the inventories and investment properties due to the Covid-19 pandemic, it said.

Kok said in this current season, E&O is keeping a close watch on evolving market conditions to ensure that it bodes well for the group's relevant launches.

"We have recently unveiled Conlay serviced residences in Kuala Lumpur and Phase C of Avira Garden Terraces in Medini, Iskandar Malaysia.

"For future launches in the pipeline, we are targeting to launch both our maiden residential project at STP2A and our third joint venture project with Mitsui Fudosan, The Peak in Damansara Heights in the second half of 2021," he told NST Property.

Kok also said, given the impact of the Covid-19 pandemic, E&0 has targeted to sell about RM230 million worth of properties for FY2021.

"We will continue to review our sales target depending on the economic conditions and how the Covid-19 pandemic unfolds," he said.

E&O's international foray is focused within prime locations in London, including Princes House along Kingsway, ESCA House in Bayswater, and a commercial property in Hammersmith.

The group's hospitality segment recorded a revenue of RM63.4 million for FY2020 as compared to RM84.3 million in FY2019. This was a decrease of RM20.9 million or 24.8 per cent.

E&O said the decrease in revenue was mainly due to the temporary closure of the Heritage Wing of Eastern & Oriental Hotel from March to December 2019 for an extensive refurbishment exercise and re-opened for business in December 2019.

The segment incurred an operating loss of RM28.6 million in FY2020 as compared to a loss of RM0.9 million in FY2019. The increase in losses of RM27.7 million was due to lower revenue recognised as a result of the temporary closure and the MCO.

Kok said the newly refurbished Heritage Wing with 100 luxuriously appointed suites at the hotel is currently open for guests.

"We are tapping on the tourism incentives offered under the government stimulus programmes by offering a wide range of packages at various price points including weekend and local holiday packages as well as staycations.

"We are especially pleased with the special Penang Staycation suite package from May 25 to June 30, 2020, which was well-received and sold a total of 721 room nights representing about RM258,400 in revenue," Kok said.

Kok said the opening of interstate travel under the recovery MCO augured well for the hotel securing additional room and F&B revenue.

source from: New Straits Times