BRDB ... May12

It has drawn out plans to sell its investment properties, couples with slow property

sales, have left the company in limbo on its future direction. Questions remain as to whether BRDB is better off forging ahead as a pure property developer or if it should remain as it is; a company with interests in development, assets and manufacturing.

The four assets up for sale are BRDB’s Permas Jusvo Mall in Johor, CapSquare Retail Centre and a holding company which owns BSC and the adjacent Menara BRDB office block in KL.

Almost eight months have passed since BRDB’s major shareholder Ambang Sehati Sdn Bhd made its unsolicited offer in 2011. BRDB’s board has yet to announce further details on the asset disposal except a brief filing with Bursa Malaysia on March 27, 2012 in which BRDB said the tender process was still on going. In the same announcement, BRDB reminded shareholders that Ambang Sehati was still evaluating its plan to increase its stake in the company, which may or may not result in a general offer.

BRDB wants to focus its resources and efforts on property development. Property asset disposal will have a mixed impact on BRDB’s credit standing as it would cease to benefit from its more stable income from property investment. It would exert a negative effect on its business risk profile over the longer term.

In June 2011, BRDB also revised the outlook on BRDB’s debt facilities from stable to negative given BRDB’s weaker financial profile resulting from slower than expected sales and delays in new launches.

Nevertheless, some reacted positively pointed out that BRDB in the short term if it manages to dispose of its assets at a good price. Most investors who want exposure to property stock prefer to own shares in a pure developer rather than an asset owner.

There is also the issue of asset allocation for BRDB. BRDB can focus its resources on working its landbank of about 809ha if it can pare down the debt associated with its CapSquare asset.

BRDB’s net asset value stood at rm3.68 per share as at Dec 31, 2011.