DPS Resources Bhd, which early this year said it is on track to roll out about RM1 billion worth of property development projects over the next five years has secured a property job in Melaka.
Its subsidiary, Shantawood Sdn Bhd (SSB) recently inked a joint venture (JV) agreement with Rembia Properties Development Sdn Bhd (RPD) for a mixed development project in Alor Gajah.
The project has a gross development value (GDV) of RM150 million and it will be developed across 10.49 hectares of land owned by RPD.
According to a filing with Bursa Malaysia yesterday, RPD will be entitled to RM19 million from the development of this project, paid to the company within seven years' repayment period until February 25, 2028.
This is based on the net book value (NBV) of the land of RM15.54 million as of July 31, 2019, as well as the future potential development value of the land.
SSB and RPD planned to develop properties targeting the medium and affordable market segment.
DPS group managing director Edward Sow Yuen Seng said it is confident that the property project will attract interests among home buyers and property investors as the land is situated in a mature location.
"The land is ready for development, which would help to escalate our development and construction works," he said.
Sow said the JV also represents an opportunity for the company to build up its land bank and ensure there is sustainable growth for the next few years.
"Given our existing property development in Melaka, this JV fits into our expansion plan. Aside from that, the property outlook market in Melaka is anticipated to recover gradually in 2021 with the allocation of funds from the state government to spur economic activities within the state," Sow said.
As part of DPS's RM1 billion roll-out target, it will complete four property projects in Melaka with a GDV of RM159.73 million in the years 2021 and 2022.
The projects are Taman Bukit Rambai Putra Phase 1 (GDV:RM96.6 million), Taman Bukit Rambai Putra Phase 2 (GDV:RM48.2 million), Taman Krubong Jaya Phase 2 (GDV:RM7 million), and Tanjong Seri Tanjong Minyak (GDV:RM7.9 million).
DPS is developing the four projects under collaboration with landowners, a strategy it banks on to save cost on land acquisition matters.
In the pipeline are seven projects, with a combined GDV of RM95.5 million.
Its future plan is to launch seven larger scale projects with a combined GDV of RM803 million.
The diversified company's two main businesses are property development and construction. Its other businesses are trading and furniture-making.
The company's net profit fell 57.1 per cent to RM4.67 million in the third quarter ended December 31, 2020, from RM10.91 million a year ago.
However, its revenue surged 82.1 per cent to RM24.38 million in the quarter compared to RM13.39 million a year ago driven by higher volume sales of rental of building and property development sales.
DPS said in the Bursa Malaysia filing that the positive growth of revenue has proven the resilience of the company and improvement of the result from developing affordable housing projects.
Moving forward, DPS is confident to remain profitable in the current financial year ending March 31, 2021 as it continues to focus on developing affordable housing projects.