Magna ... Feb10

It is planning a RM1.3 billion twin tower development on 1.06ha of prime land – now occupied by the Lai Meng Gril’s School – that is owns in Jln Ampang. It hopes to kick off the project by 2013 and envisions two 52 story towers that will incorporate offices and residences and a hotel.

The Lee family, via Fantastic Realty Sdn Bhd owns 15.42% of Magna.

The Jln Ampang development is going to be its flagship project.

*** In March 2009, Magna announced a proposal to buy the land from the Lai Meng Board of trustees for RM148 million. As part of the deal, Magna needs to facilitate the transfer of 2.2ha of land in Bkt Jalil, which is owned by Santari Sdn Bhd, to Lai Meng. Santari had bought the tract from Bkt Jalil Development Sdn Bhd (BJD) in 2009 ***

Magna’s cost of acquisition is much lower than that of Sunrise Bhd. It is true that its low cost gives Magna an advantage over other developers in the area but given the size of the project, can the company acquire the necessary financial muscle?

As of Sept 2009, Magna’s books showed that it had some RM15.9 million in its coffers. It registered a net profit of RM6.33 million on the back of RM179 million in revenue for the nine month period.

Magna now (Feb 2010) has no money to do it on its own. But in 2013, it said it will be different due to its undertaking the Jln Ampang project given six project launches planned from April 2010. These projects are expected to generate at least Rm200 million in net profit for the group.

On top of all, Magna has very little borrowings, which means ample room to gear up.

At present, Magna only has three ongoing projects. The company will need to go on an acquisition trail after it depletes its land by 2013.

On top of the tract in Jln Ampang, Magna plans to buy a piece of land in Bkt Jalil, south of KL. However, the purchase of the 4.4ha parcel will be stuck in limbo until the owner of the land – BJD – calls for an EGM to seek shareholders approval for the proposal.

BJD, which is a subsidiary of Ho Hup Construction Bhd, has been ordered by the courts to hold and EGM by March 29, 2010. This follows an injunction to stop and/or restrain BJD from disposing of the property to any other party and compel BJD to meet its obligation as stipulated in the sale and purchase agreement signed with Magna.

The injunction brought by Magna came five months after Ho Hup withdrew the proposed sale of the 4.4ha at its EGM in July 2009 due to the disapproval of an opposing faction.

Give the prolonged board tussle at Ho Hup, it remains unclear whether Magna’s purchase of the BJD land will become a reality any time soon.

Nonetheless, Magna does not foresee any problems in the transfer of the 2.2ha in Bkt Jalil from Santari for the relocation of the Lai Meng Girl’s School from Jln Ampang. The relocation is integral to Magna’s proposed acquisition of the Lai Meng land, where its twin towers will be erected.

Be that as it may, the jewel in Magna’s crown is undoubtedly its piece of prime land in the city.