I have added some comments in purple italics.
- BLand ratings unaffected by move to drop Viet project
By Chong Pooi Koon Published: 2008/01/29
The head of research at Kenanga Investment Bank says it is all right for the company to pick and choose projects that are economically feasible (Err.. that's rather common cow sense eh? Which logical company wants to embark on a project that is doomed to lose money?)
BERJAYA Land Bhd's decision to drop a planned transportation infrastructure job in Vietnam last week did not stir concerns among analysts, who believe that the firm will be better off picking jobs that are more financially viable.
The group is already occupied with five property development projects in both Hanoi and Ho Chi Minh City and they are not too worried about a single infrastructure job that did not pan out well.
"We understand that cessation of the proposed project would have minimum impact on the group's venture in Vietnam," a SJ Securities analyst who tracks the stock wrote in a report yesterday. The broker kept its "overweight" call on BLand stock, which ended flat yesterday at RM5.80.
BLand last Friday said that it will not proceed with a plan with Tin Nghia Co Ltd, a state-owned company from the southern Dong Nai Province, on the overall development of Nhon Trach District that included its transportation network.
The companies have decided to let the memorandum of understanding signed in late 2006 lapse, after a 12-month extended feasibility study done by BLand.
"I think it is all right for them to pick and choose projects that are economically feasible," the head of research at Kenanga Investment Bank, Yeonzon Yeow said.
"This is one of the earlier joint ventures that they did not announce. The firm already has its hands full in Vietnam and we don't mind that this is not working out," he added. ( Well I am certainly puzzled with what's being said here. I, for one, was aware of this joint venture and there was announcements made on Bursa website by Berjaya Land. See MEMORANDUM OF UNDERSTANDING BETWEEN BERJAYA LAND BERHAD AND TIN NGHIA CO LTD, VIETNAM and BERJAYA LAND BERHAD ("BLB" or "Company") EXTENSION OF TIME FOR THE MEMORANDUM OF UNDERSTANDING ("MOU") BETWEEN BLB AND TIN NGHIA CO LTD, VIETNAM IN RESPECT OF THE PROPOSED CO-DEVELOPMENT OF THE NHON TRACH DISTRICT (INCLUSIVE OF ITS TRANSPORTATION AND INFRASTRUCTURE NETWORK), DONG NAI PROVINCE, VIETNAM ("PROPOSED PROJECT") )
Both BLand and the Viet- nam partner have decided to focus instead on specific developments within the district, which involves a bridge that links the area to Ho Chi Minh City, as well as the recently announced plan to develop a 600ha in Nhon Trach New City.
The bridge is part of the initial overall plan that was scrapped.
On top of that, BLand still has other projects in that country, including Thanc Ban New City mixed development, Hanoi Electronics joint venture, Vietnam Financial Centre in Ho Chi Minh City.
How?
Yes, since Berjaya Land has tons of projects announced in Vietnam and judging from the size of these projects, perhaps there are valid arguments that Berjaya Land could still have a bright future ahead...
but.. assuming that I am a share holder and from my investor prospective, then perhaps this episode should serve as a caveat for me and that I should not discount the issue of execution risks involved in all these mega projects. Projects do get delay, projects do get aborted and sometimes the profitability is not as it seems.
What say you?
No comments:
Post a Comment