Property
Charting Meda’s new direction
Joseph Wong 
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NEW major shareholder Datuk Seth Yap Ting Hau, who now has a sizeable 14.36% direct stake in Meda Inc Bhd, will be the driving force behind the ailing property developer as it moves ahead.

The aggressive 39-year-old entrepreneur is planning to further increase Meda’s sizeable land bank.

Yap is planning for Meda to be synergistic with his tourism business, similar to what he has done for his other company M101 Holdings Sdn Bhd.

As at Dec 31 last year, Meda incurred a net loss of RM8.8 mil at the group level while its revenue dropped significantly from RM71.4 mil in FY2016 to a mere RM21.4 mil in FY2017.

Meda has actually been incurring losses since 2014. However, the group owns a substantial amount of undeveloped land – a total of 303ha which has a net book value of RM71.98 mil as at the end of last year.

Apart from the 251.8ha Kuala Linggi land in Melaka, the company has 45.7ha in Sungai Siput, Perak; 3.9ha in Tanjong Kling, Melaka; and another 2.5ha in Sepang, Selangor.

“At this moment, the management is still studying Meda Inc’s existing assets to derive ways to maximise their potential,” Yap tells FocusM in an email reply.

“The management’s focus in the short term is to turn around the operations and the financials of the company,” he says.

 

Melaka landbank

Yap was drawn to Meda as, despite its loss-making streak, it holds the qualities that match M101’s business expansion plans.

“We foresee that it will enable us to enhance our position as a property developer by championing the property tourism business,” he says.

Observers note that the sizeable Melaka landbank is a major reason for Yap’s acquisition in Meda.

“Given M101’s property tourism strategy, this is very much within Yap’s expertise.

“The question is what Yap is planning for the 250-odd hectares of land in Kuala Linggi.

“His M101 experience is in high-rise development so this will be an interesting move on his part,” says an observer.

Yap has revealed that Meda is in discussion with several international brands for potential partnership opportunities for the Melaka property.

“Once we finalise the terms with our international partners, the necessary announcements will be made,” he says.

Yap’s M101 currently has three major property projects - the RM130 mil M101 Dang Wangi, which was completed last year, and the two on-going projects, the M101 Bukit Bintang and M101 Skywheel, which have a gross development value of RM365 mil and RM2.2 bil respectively.

 

Ferris wheel

M101 Skywheel is an iconic 78-storey building that will feature the world’s highest shopping experience owing to its sky mall and a Ferris wheel. It is slated to be M101’s flagship property development.

Both M101 Dang Wangi and M101 Bukit Bintang are fully sold while M101 Skywheel generated over RM530 mil sales as of January this year.

In addition, the company has partnered with US toy company Hasbro Inc for the world’s first Monopoly-themed hotel, which will be located at its existing mixed development project called M101 Bukit Bintang.

Upon completion, Yap says, the five-star boutique hotel, to be known as Monopoly Mansion by Sirocco, will be managed and operated by the developer’s hospitality arm Sirocco Hospitality Group.

The Monopoly Mansion will feature 255 luxurious guest rooms, a rooftop pool and sky lounge, a sky ballroom, meeting lounges and a spa.

“Not only is it poised to be the first Monopoly-themed hotel in the world, we also want to bring a new flavour to the hospitality industry,” he says.

 

Dealing with China

M101 also has collaboration with brands such as Planet Hollywood and Studio FA Porsche to deliver exclusive suites in its M101 Skywheel project.

According to a press release, the sales at M101 Skywheel came mostly from countries where the project has been launched.

These include Malaysia (RM150 mil), Indonesia (RM100 mil), China (RM100 mil), Japan (RM100 mil) and India (RM80 mil).

“From M101 Skywheel, we can see that Yap has experience in dealing with China as well as other Asian nations.

“He is a smart man and has been able to tap into the tourism industry, so it will be interesting to see how he deals with larger parcels of land,” says the observer.

Yap points out that M101 is championing property tourism as its core business strategy.

“Instead of building just another integrated development, we are building a branded development that fits the market’s needs and further elevates Malaysia’s tourism industry.

“We want to build icons that are well-known across all target markets and industries to represent Malaysia.

“I believe that this will enhance Malaysia which is a developing country. M101 Skywheel is contributing to the redevelopment of Kampung Baru and bringing about the success of property tourism,” he says.

 

No merger… as yet

Yap tells FocusM that he had no intention to use Meda as a backdoor listing vehicle for M101 when he decided on becoming a major stakeholder of the property developer.

Rather, he saw it as an opportunity to rescue the company, which has good potential.

In June, Yap emerged as a major shareholder of Meda with a 9.43% stake. M101 Ventures Sdn Bhd has 16.06% in Meda.

Yap continued his acquisition of Meda shares and as of Sept 3, he had accumulated a direct 14.36% stake while M101 Ventures’ stake remains at 16.06%.

Observers note that Yap, as the biggest stakeholder, is now in the driving seat and deciding the future direction of the company.

Other major shareholders of Meda – Datuk Tiong Kwing Hee, Datuk Dr Patrick Teoh Seng Foo, Datuk Kenneth Teoh Seng Kian and Teoh Seng Aun – apparently have given the greenlight for Yap to turn the company around.

“Obviously, Seth is the right candidate for Meda Inc. He is an aggressive entrepreneur. He is new blood and has many ideas.

“I am confident that he will turn Meda Inc into a big and profitable company,” Tiong was reported to have said.

Interestingly, it was Tiong who brought Yap into the picture as the white knight to rescue the ailing Meda.

Considering the amount of speculation that had been surrounding a possible merger of Meda and property developer EcoFirst Consolidated Bhd, it now makes sense why Yap entered Meda.

Tiong is after all the CEO of EcoFirst Consolidated Bhd.

“The operations of Meda is separate and distinct from EcoFirst. However, we are aware that certain major shareholders of Meda are also major shareholders of EcoFirst,” says Yap.

“Meda will continuously bid for projects, including from M101 and EcoFirst, as and when the opportunity arises.”

Similarly, the same holds true for Meda and M101.

“Meda Inc holds the qualities that match M101’s business expansion plans and we foresee that it will enable us to enhance our position as a property developer by championing the property tourism business,” says Yap.

However, he doesn’t discount the possibility of merging the two entities: “We will look into this when the time comes and the necessary announcement will be made, should there be any name change.”

 

Keeping them separate

For now, Yap is planning to ensure that both Meda and M101 operate as separate entities.

“As Meda Inc is a listed company, there is a need for M101 and Meda Inc to be operated separately and to have their own distinct brands,” he explains.

“The branding matters are being reviewed by our consultants. Once a decision is made, we will embark on a branding initiative to reintroduce Meda and/or M101.

“Nevertheless, there may be certain projects which M101 may work together with Meda Inc.

“Meda Inc has been awarded the construction project of M101 Bukit Bintang for the Monopoly Mansion interior renovation works.

“Moving forward, the management will continuously evaluate potential opportunities for both companies to work together.

“If required, the necessary announcements and/or shareholders’ approval will be sought,” he says.

But the bigger question is how investors and buyers will react to the new direction, helmed by Yap. Prior to his acquisition, Meda’s shares were priced at 33 sen, a far cry from its peak of 85 sen on July 31, 2013.

The counter’s shares closed at 37 sen as of Oct 2.

Confidence in the company will depend on Yap’s next move and how he manages and interacts with the rest of the major stakeholders.

But as they have given him the thumbs up, the path forward looks clear. FocusM



This article first appeared in Focus Malaysia Issue 302.