MKH Annual Report 2020

27 MKH BERHAD Property Investment This division is expected to sustain the occupancy rate by maintaining an average rental yield of approximately 3% to 4% per annum based on fair value of the properties as at 30 September 2020 despite the COVID-19 pandemic. This division has also benefited from the stimulus packages announced by the Government such as wage subsidy programme and electricity bill discounts. Management Discussion and Analysis Report PROSPECTS The Board is optimistic and expecting to achieve satisfactory results for financial year ending 30 September 2021 (“FY2021”) despite the COVID-19 pandemic impact on the economy and businesses in Malaysia and globally mainly from the following principal business segments: Property Development and Construction With the unbilled sales of RM1.02 billion as at 30 September 2020, the Group is well positioned for FY2021 with new and ongoing developments, such as Hillpark @ Shah Alam North, Kajang 2 Precinct 2, TR Residence, Inspirasi @ Mont Kiara, Kajang East Precinct 1, MKH Boulevard 2, Nexus @ Kajang, Bandar Teknologi Kajang Shops, Hillpark 3 Phase 1B Shop, Kajang East Avenue Shops and MIRAI Residences @ Kajang 2 Precinct 1. The unbilled sales of the Group will provide sustainable income recognition for the next two (2) years. In addition, the new project launches will further contribute to the unbilled sales. Our FY2021 planned launches with total estimated Gross Development Value of RM1.0 billion are in line with the Government’s encouragement for more affordable residential projects and transit-oriented developments (“TOD”). It comprises mainly of affordable to mid-ranged landed residential and high-rises located near the public transportation system such as Nexus @ Taman Pertama Cheras, TR2 Residence @ Jalan Tun Razak, Iris @ Hillpark Shah Alam North and Kajang 2 Precinct 3 which will be phased according to prevailing market sentiments. The latest Home Ownership Campaign (“HOC”) introduced in Budget 2021 by the Government on the new exemptions on stamp duty for memorandum of transfer and loan agreement is expected to further improve the property market sentiment. In addition, we continuously explore joint venture opportunities with potential partners with the aim to create value for the Group. Plantation Moving forward, our plantation division is expected to contribute positively to the Group’s future earnings. We expect the price of CPO to be well supported in 2021 mainly due to improved demand and concerns over the La Nina wet weather impact on edible oils supplies globally. The adoption of B30 biodiesel mandate in Indonesia will further increase the demand for CPO. CPO prices have been trading strongly with the current price averaging RM2,750/MT (net of export levy and duty) in Indonesia which augurs well for the plantation division. The Group will continue to focus on the estate management to further increase the production efficiencies including oil extraction rate, expand on the use of mechanical-assisted collection of FFB and maximising the utilisation of the CPO mill to further capitalise on the higher CPO price. Wage Subsidy Programme Electricity Bill Discounts Stimulus Packages Artist’s impression of Nexus @ Kajang which is located just opposite the KTM Komuter and MRT station