(July 31): Property developer Aspen (Group) Holdings, which focuses on affordable housing, joins the growing list of Malaysia-based companies listing on the Singapore Exchange.
Scheduled to list on July 28 on the Catalist board, Aspen offered 173.3 million new shares in its IPO. Of that, 4.3 million shares were offered to the public, while the remaining 168.9 million shares were placed out to investors, which included institutions. The public offer was 7.8 times subscribed and the placement was fully subscribed.
Based on its issue price of 23 Singapore cents, Aspen will raise $36.7 million. Of that, $25 million has been allocated for acquisition of land and future developments, and the balance for the repayment of bank borrowings, working capital and listing expenses.
Asked why the property developer, which is based in Penang, chose to list in Singapore, its founder, president and CEO Murly Manokharan replies, “Well, why not?
“We came in as a very Penang-centric real estate property company with the vision to provide affordable housing. As we intend to be a regional [player], we feel Singapore attracts more international investors… So, it fits us well.”
The 31-year-old says the group dreams of transforming the property development landscape in Malaysia. Its business model, he explains, is anchored on the concept of affordability. But as more developers commit to building affordable properties, Aspen will leverage on its network of international business partners to add greater value to its products.
For example, several components of its flagship development, the 245-acre Aspen Vision City (AVC) in Batu Kawan, Penang, are developed in collaboration with local and international big names such as Antah Schindler, IBM Malaysia, Telekom Malaysia, Teka Küchentechnik (Malaysia) and LG Electronics so as to provide end-to-end value-added services to its buyers.
“The way we anchor our business model, affordability has always been important. And when we hand over the keys to our buyers, our homes are fully furnished, and it’s a basis that we are working on on our current projects,” Murly says.
AVC is an 80:20 joint venture between Aspen and IKEA franchisee, Ikano. It is a multi-phase development that will be completed over the next 10 years, according to Murly. AVC will comprise an integrated shopping centre and the first IKEA store in Malaysia’s northern region, residences, offices, a medical hub, international schools, retail shops and an integrated central transportation hub for Seberang Prai.
Be that as it may, would Aspen be able to turn around from an after-tax loss of RM306,000 ($97,349) booked in its financial year ended Dec 31, 2016? It had reported an after-tax profit of RM4.69 million in FY2015.
Murly explains that the loss is an accounting loss due to early adoption of IFRS 15. “However, we have positive operating cash flow of RM93.22 million.”
He adds: “Investors are looking forward to the future and not just at past losses. We do what we do best and business is as usual.”
Aspen has an order book of RM1.3 billion, mainly derived from two ongoing projects — Vervea (83% sold) and Tri Pinnacle (82% sold). This will sustain the company for the next 1½ years, as both are due to be completed in 2018.
“I think the order book itself speaks of what is to come. We have a vision of changing the property landscape in Penang and Malaysia. Notice that the focus now is on affordable housing.
“We sell our products at RM300,000 per unit as a base case. With all the value-added services, depending on type, we can go up to as much as RM400,000 for a fully furnished 800 sq ft condominium unit, which comes with facilities,” Murly says.
He contends that not many property developers place emphasis on building affordable units.
“In the Malaysian concept, not many focus on affordable properties. The majority of the players look at high income or high net worth markets, but as with any other industry, demand from people looking at niche-based properties is out there.
“The primary target market [consisting of personal home buyers] has always been larger compared with those buying for investment purposes. The key is to be visionary with your business, anchor that with your network of global partners and co-brand on services that you aggregate,” Murly explains.
Post-listing, Aspen is looking to grow its landbank beyond Malaysia. In its prospectus, it cites Thailand, the Philippines, Vietnam and Cambodia as among markets it can tap.
“We will be expanding into these markets together with our partner, IKEA Southeast Asia, with whom we have been in a good business relationship since we jointly developed AVC. We aim to explore doing mixed developments with them in these markets,” Murly says.
Aspen has a landbank of 279 acres. AVC is spread out over 245 acres, while the remaining 34 acres are in Penang and Kajang. The sale and purchase agreement for the land in Kajang has yet to be completed.
