KUALA LUMPUR (March 16): Melaka-based property developer Teladan Setia Group Bhd made its debut this morning on Bursa Malaysias ACE Market at a 25% premium or 12 sen higher at 60 sen.
The counter, whose initial public offering (IPO) price was 48 sen apiece, opened with a trading volume of 32.53 million shares.
As of 10.05am, Teladan Setia traded at 58 sen apiece, with a volume of 162.33 million shares, making it the second most actively traded stock on the local bourse at the time of writing.
During a virtual press conference following its listing on Bursa, Teladan Setia managing director Richard Teo said of the IPOs RM77.3 million in proceeds, RM35 million will be used for future land bank acquisitions, which will be located in Melaka.
The future projects for this land bank will be landed properties. This is because we see that there is still very strong demand for landed properties in Melaka, and we also focus purely on residential property units.
Residential property units in Melaka are one of the lowest overhang units throughout Malaysia. According to the National Property Information Centre (NAPIC)s figures, last year, the property overhang of residential units in Melaka was only at about 925 units, compared with the national average of 3,450.
“From this IPO, we are targeting land bank for landed and residential property units, said Teo.
Teo explained that the group is planning for this land bank to eventually house affordable residential units priced between RM400,000 and RM500,000 each as this class of properties are the most sellable.
According to Teo, Teladan Setia has a gross development value (GDV) of RM1.6 billion inclusive of ongoing and future projects which is set to last for the next four years. As of September 2020, it had a property inventory of RM43 million.
Moving forward, Teo believes that the implementation of government stimulus plans, low interest rates and the Home Ownership Campaign (HOC) will help homebuyers buy their first homes. He stated that for the Melaka housing market, most buyers are first-time house buyers, a consumer segment the developer is targeting.
He views that the market is currently mounting a recovery from its recent lows.
When queried about whether the property developer will expand its operations to outside of Melaka, Teo noted that it is still focused on Melaka at the moment.
But he also said that Teladan Setia had bought a piece of land in Seri Kembangan, Selangor, opposite the Serdang KTM station, marking its first project outside of Melaka. This land will be used for a high-rise project, Teo added, while reiterating that its main focus is on residential properties in Melaka.
The group will be launching Phase 3B and Phase 4 of its Taman Desa Bertam development, which consists of double-storey semi-detached houses and single-storey cluster houses. It will also be launching its Bertam Heights development, which is next to its Taman Desa Bertam properties. Bertam Heights will be a gated and guarded property development.
In terms of potential margin compression, Teo noted that the group’s gross profit margin for the past three to four years was between 33% and 35%, while its net profit margin stood at 17% to 18%.
Even last year, during the hardest of times during the [Covid-19] pandemic, we still maintained our gross margin of 33% to 35% and PAT (profit after tax) margin of 17% to 18%. We didnt see margin compression. In fact, if house prices do go on an uptrend, we might enjoy an even healthier margin, he noted.
Teo added that the group is one of the top three developers in Melaka, saying that purely based on residential units, it commands a 9% to 10% market share of the property market in the state.
He noted that the group had a dividend policy of 20% of PAT, subject to board and shareholder approval.