Mulpha ... Nov10

Property developer and investment firm Mulpha International Bhd (MIB) has come to be better known in Australia than in Malaysia.

In Malaysia, MIB suffers from legacy issues and is still perceived by some as being a trading company. But MIB is now the largest Malaysian property player in Australia.

MIB's Aussie property portfolio (owned by its wholly owned subsidiary Mulpha Australia Ltd) is today worth around A$1bil (RM3.1bil). The prized assets include a few five-star hotels such as the InterContinental Sydney, a resort-styled property development called Sanctuary Cove in northern Gold Coast that has a gross development value of around A$2bil (RM6.2bil) and Hayman, a five-star private island destination in Australia's Great Barrier Reef.

Topping all that is MIB's 25% stake – making it the single largest shareholder – in FKP Property Group, Australia's leading property investment company. The Australian-listed FKP is also the largest private sector owner-operator of retirement villages in Australia and New Zealand.

All these assets were acquired by Mulpha Australia between 2002 and 2004. FKP and MIB were recently in the news in Australia over rumours that FKP's second-largest shareholder, Stockland, itself a leading Australian property developer, could be seeking to take over FKP. MIB is not keen on selling its shares in FKP as there is still a lot of upside potential in the latter.

MIB's 25% stake in FKP alone has a market value of A$275mil (RM855mil). MIB's other significant strategic stake in a listed company is its 22% holding in Mudajaya Group Bhd. MIB's Mudajaya stake has a market value of some RM350mil. Combined, these stakes are worth around RM1.2bil, which is close to the market capitalisation of MIB of RM1.27bil at 15 Nov 2010’s prices.

However, it should be noted that MIB has slightly over RM1bil in debt. Still, that debt level has not been a concern for MIB because of its huge asset base.

In Australia, MIB is poised to pocket over A$100mil (RM309mil) if the sale of its Hilton Airport Melbourne hotel goes through. MIB had confirmed that the hotel had been put up for sale and that the compay is in advanced talks with potential buyers but declined to comment on pricing.

MIB's Hayman resort is also enjoying a new income stream from the sale of a few plots of land on the island as exclusive holiday homes. The company had secured the necessary approvals to build 42 homes on Hayman Island. So far three have been sold at prices from A$15mil (RM46.4mil) to A$20mil (RM61.4mil), depending on the size of the house. These prices are believed to be a record high for holiday homes in Australia.

Then there's the Sanctuary Cove, which was acquired by Mulpha Australia in 2002 for A$208mil (RM644mil). More than A$60mil (RM186mil) of property sales were achieved in the first half of 2010.

MIB also has Leisure Farm Resort, it's prized Malaysian asset, a vast award-winning resort-styled residential development in Johor. Leisure Farm is strategically located within Iskandar Malaysia and is only a 15-minute drive from Tuas in Singapore via the second link. Leisure Farm reported a rise in profits in the first half of 2010 to reach RM8.6mil from RM2.2mil in the previous corresponding period.

Leisure Farm is likely to benefit from the fact that since early 2010, Malaysia and Singapore have agreed to cooperate on the development of Johor.

MIB has another 600 acres of land in Leisure Farm to develop.

To be noted is the fact that MIB has had to equity account for losses stemming from writedowns of its Australian assets, mainly FKP. This is because under all assets are required to be marked to market under Australian accounting rules. Hence when the global financial crisis hit, the values of MIB's and FKP's assets had to be written down.

FKP has a huge retirement asset portfolio. During the better years, these assets were written up but when the crash came, they had to write it down. These are accounting losses stemming from FKP and does not mean that FKP is not doing well.

MIB's board is reviewing its policy regarding dividends. MIB has not been paying dividends but by the year-end (2010), the company should have a clear strategy on dividends.