KUALA LUMPUR: Eastern & Oriental Bhd (E&O), which will be launching close to RM1 billion worth of projects in the current financial year ending March 31, 2017 (FY17), intends to monetise its land bank to improve cash flow.

E&O managing director Kok Tuck Cheong said the group will be rolling out the remaining phases of The Tamarind in Penang, worth RM160 million, and the Conlay Place, which carries a gross development value (GDV) of RM800 million by this year.

“We will also be intensifying our marketing efforts and proactively sell existing inventory in order to generate positive cash flow and profit recognition,” he told a press conference yesterday.

The property developer announced that its revenue surged 137% to RM163.31 million for the first financial quarter ended June 30, against RM68.89 million previously. However, its quarterly net profit came in at RM3.24 million, or 0.26 sen per share, down 86% from RM23.26 million or 1.9 sen per share.

The contraction was mainly because of a hefty RM20.27 million disposal gain in the previous corresponding quarter.

As at March 31, 2016, the group’s unbilled sales stood at RM1.2 billion, which provide earnings visibility until FY18. E&O’s cash balance stood at RM247.29 million, up from RM201.19 million a year earlier. However, net borrowing also climbed to RM1.27 billion, from RM962.99 million, translating into a net gearing ratio of 0.78 times.

Kok said the group views Bank Negara Malaysia’s recent move to cut the overnight policy rate (OPR) as “good news to the group” and hoped this could translate into new sales for E&O. “We are also looking forward to [any] improvements in the lending guidelines.”

He added that the OPR cut is also positive for the group’s borrowings as most of its debts are on a floating rate. “According to our estimation, every two-basis-point cut in [the]OPR would result in RM1.5 million of savings.”

According to E&O’s annual report 2016, the group’s land bank currently spans 1,645.4 acres (665ha) across Penang, the Klang Valley and Johor.

“We are continuing to review and see what the opportunities are to develop it in terms of the timeline and the GDV that we can generate under the current market scenario,” said Kok.

Citing the group’s tie-up with Japan-based real estate company Mitsui Fudosan Asia Pte Ltd to develop the Conlay Place project in Jalan Conlay, Kok said this was one of the ways for the group to reduce its development risks.

E&O is currently involved in 166-acre land reclamation works for Phase 2 of the RM25 billion Seri Tanjung Pinang in Penang.

Kok said the group had begun reclamation and dredging works after obtaining approval for the Detailed Environmental Impact Assessment study, adding that reclamation works are expected to be fully completed by June 2018 as per the agreement signed between the group and China Communications Construction Co Ltd, the reclamation contractor.