AsiaPac ... Jul10

Asian Pac Holdings Bhd is looking at a more stable revenue stream from recurring income through its KK Times Square II project in Kota Kinabalu, Sabah.

The group planned to replicate the project model in Peninsular Malaysia, possibly in Johor Bahru, Penang or the Klang Valley, said Asian Pac managing director Datuk Mustapha Buang.

The Kota Kinabalu project is housed under its unit Syarikat Kapasi Sdn Bhd. The company will not sell any of the retail lots in its mall development within the project, but retain the units for investment gain and rental income.

Asian Pac’s long-term goal is to diversify into more recurring income.

Syarikat Kapasi which is developing the KK Times Square project last Tuesday signed an agreement with Affin Investment Bank Bhd to raise RM200 million over the next five years under a commercial paper and medium term note (CP/MTN) programme. Malaysian Rating Corporation Bhd (MARC) rated the entire programme MARC-1/AAA-1.

The ratings agency said Syarikat Kapasi’s near-term earnings visibility was somewhat limited given its reliance on development revenue from its serviced apartments and exterior shop lots, although car park rental from its completed projects would provide a modest recurring earnings stream.

Notwithstanding this, noteholders would be insulated from the downside risks in relation to Syarikat Kapasi’s credit profile by virtue of the guarantee provided by Danajamin.

For the year ended March 31, 2010 (FY10), Asian Pac posted a net profit of RM20.2 million on revenue of RM101.6 million compared with RM1.1 million and RM83.4 million, respectively, in FY09. The weak FY09 earnings were due to the downturn in the property sector due to the global financial crisis.

Asian Pac also has a number of projects in the peninsula and will be launching in the third quarter of this calendar year a shophouse project in Johor with GDV of RM100 million, a commercial project in Wangsa Melawati, Kuala Lumpur with GDV of RM70 million and a shop and apartment project in Kepong worth RM300 million.