Titijaya allays concern on cash calls
Lim Cian Yai 
Lim says the company has a very healthy balance sheet

Mid-sized property developer Titijaya Land Bhd has implemented several rounds of fund-raising since last year, raising concerns on its financial health amidst the challenging property market.

However, the company says tapping the capital market gives it cheaper access to funds as it will not have to pay for interest versus a bank loan.

There is nothing to worry about, says Titijaya group managing director Tan Sri Lim Soon Peng. He says the company still maintains a very healthy balance sheet, with net gearing at 0.37 times as of June 30.

“The corporate exercises are necessary for us to embark on projects with positive upsides that would sustain the company’s growth,” he tells FocusM.

In June last year, Titijaya announced a private placement of up to 10% of its share capital to raise up to RM48.53 mil. Proceeds were to be used mainly for the property development business and as working capital.

Some 36.66 million shares were issued later at RM1.35 apiece, raising RM49.41 mil.

Two months later, it proposed a renounceable rights issue of up to 615 million new irredeemable convertible preference shares (ICPS). Shareholders were entitled to subscribe for the new shares at a ratio of three ICPS for every two ordinary shares held. The issue price was 16.5 sen.

The RM101.47 mil proceeds would be used to fund property development expenditure and partial repayment of bank borrowings.

Then in mid-November, it proposed a share split and an issuance of 1.1 billion free warrants. Should shareholders fully exercise the bonus warrants at the indicative exercise price of 25 sen, Titijaya is set to receive RM276.18 mil fresh capital. The bonus issue was called off a month later.

Shareholders were also puzzled over the company’s decision to issue new shares for the acquisition of NPO Builders Sdn Bhd for RM115.61 mil in September last year.

Titijaya has issued 79.73 million new shares at RM1.45 each. NPO is the registered owner of a parcel of residential and commercial land each, with a combined hectarage of 13.44ha in Bukit Raja, Selangor.

Shareholders are also closely monitoring the dilution impact of these issuances. Titijaya has 410 million shares issued.

“The dilution impact will be gradual as the ICPS issue was structured to minimise the dilution effect on EPS (earnings per share), which would otherwise have an immediate impact if the fund-raising exercise was a rights issue of ordinary shares instead,” Lim says.

The ICPS has a tenure of five years at a conversion ratio of 10 ICPS for one ordinary Titijaya share.

For the financial year ended June 30, 2017, Titijaya recorded a net profit of RM76.73 mil against RM68.34 mil in the previous year despite posting a lower revenue of RM380.75 mil versus RM400.08 mil.

Lim says Titijaya’s business strategies that revolve around strategic alliances with reputable government agencies and synergistic partners have paid off. 

Moving into FY18, Titijaya expects to remain resilient, driven by the RM1.1 bil new project launches which include the Riveria and Damansara West. 

This article first appeared in Focus Malaysia Issue 249.