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NRA Capital Pte Ltd

Written by: Jacky Lee

Monday 11 May 2015

TEE Land – Press release

Award RM267m IPT contract in Malaysia

We keep our earnings forecasts unchanged as we already anticipated revenue from the Third Avenue project will start contributing in FY05/16 earnings.

TEE Land announced that its indirect wholly-owned subsidiary, TEE Resources Sdn Bhd has awarded a contract of RM266.8m for the execution and completion of building works including electricity works, sanitary and cold water distribution system, air conditioning and mechanical ventilation system, fire protection system and associated external works for the latter’s development project, Third Avenue, in Cyberjaya, Malaysia to PBT Engineering Sdn Bhd. PBT Engineering is an indirect wholly-owned subsidiary of TEE International Limited.

The award of the contract is considered an Interested Party Transaction (IPT) covered under the IPT general mandate approved by shareholders at the Extraordinary General Meeting held on 25 September 2014. The Contract was awarded after going through the established tender and evaluation process involving a team of professional external consultants.

In addition,  TEE Land Limited also announced that its associate, Chewathai Limited has acquired 8 plots of land of approximately 1,364 sqm, located at Pracharat Sai 2 Road, Bang Pho, Bangsue District, Bangkok, Thailand for a purchase consideration of THB101m (S$4.1m). Assuming plot ratio of 3, this translates to around S$92 per sqf). The Land, which is freehold, is presently zoned for “Residential” use and situated within the densely populated area of Bang Pho, easily accessible by Bang Pho BTS station (currently under construction). The Acquisition is part of Chewathai’s strategy to build up a portfolio of development properties as part of its listing plan. Chewathai will finance the Acquisition by internal funds and bank borrowings.

Our view:

We keep our earnings forecasts unchanged as we already expected Third Avenue project revenue to start contributing to FY05/16 earnings. Though the sales of the phase II commercial units have been affected by the down cycle as well as the implementation of GST in Malaysia, it is still more than 50% sold and the group decided not to delay its progress.  

Further, as a young property developer, Third Avenue is the largest 100%-owned integrated project for TEE Land so far, and the group can’t wait to prove itself capable for large scale projects. Given the experience gained from its Thailand associate’s projects, we see little execution risk for TEE Land on this project. Our fair value remains at S$0.38, still based on 30% discount to RNAV, maintain Overweight.


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