Wind of fortune blowing for I-Bhd

SHAH ALAM: The wind of fortune is blowing for I-Bhd as the company charts a new course in real estate and information and communication technology (ICT). Returns from its maiden property development in Shah Alam are expected to boost net profit by at least 10% in the current financial year ending Dec 31, 2008 (FY08).

I-Bhd, formerly known as Sanyo Industries (M) Sdn Bhd, began as an electrical home appliances manufacturer. Stiff competition from low-cost producers in China had prompted the company to think outside the box, which eventually led to I-Bhd's exit from the business.

In the second half of 2005, I-Bhd unveiled its intention to undertake its maiden property project - the RM2 billion i-City. The integrated commercial development sits on 28.8ha (72 acres) of freehold land in Shah Alam's Section 7.

"The journey we started three years ago is bearing fruit. We have nowhere to go but up," I-Bhd director Eu Hong Chew told reporters during a media visit to i-City's development site yesterday.

"We expect double-digit growth in net profit in 2008," Eu added.

I-Bhd's earnings declined in FY08's second quarter ended June. Net profit fell 4.4 % to RM525,000 from RM549,000 a year earlier while revenue was down 36% to RM475,000 from RM742,000. Going forward, property development will be the company's major revenue source.

i-City, a privately-funded five-year initiative, is due for completion by 2011. The future digital city includes a shopping mall, offices and hotels, besides apartments. So far, 44 cyber office suites have been completed and sold.

i-City was certified as an MSC Cybercentre by the government in May this year, placing the project on a par with Cyberjaya, KL Sentral and the Kuala Lumpur City Centre.

The corporate makeover of I-Bhd has received the thumbs-up from a major shareholder. Permodalan Nasional Bhd (PNB) president and group chief executive officer Tan Sri Hamad Kama Piah Che Othman said PNB was convinced of I-Bhd's new business model which combined the expertise of real estate development and ICT, hence differenting the firm from other property players in the country.

PNB is the second-largest shareholder with 17.15% in I-Bhd, after Sumurwang Sdn Bhd which holds 54.45%. "Good things will happen here (I-Bhd)," Hamad Kama Piah said during the visit to i-City yesterday.

He was non-committal when asked whether the state-owned fund manager planned to raise its stake in the property developer. "I have to get my advisers' (opinion). Our people will look at it," said the captain of PNB which manages some RM120 billion as of June this year.

Other property firms under PNB's stable include Island & Peninsular Bhd and Petaling Garden Bhd. PNB had taken both firms private in 2007.

I-Bhd fits strategically into PNB's portfolio as the developer could extend its ICT expertise to other real estate firms held by the fund manager.

By The EDGE Malaysia (by Chong Jin Hun)