16 March 2015
WCT Holdings Bhd is eyeing to derive 20% of the group's net profit from its investment and management division by 2016, from 10% currently.
This will be on the back of the Bukit Tinggi Shopping Centre in Klang, Paradigm Mall in Petaling Jaya and Gateway @ klia2 in Sepang, with better margins from malls, compared with construction and property.
Executive director Kenny Wong Yik Kae (pix) told SunBiz it is committed to growing the shopping mall business and that shopping malls under the group will grow to 3.3 million sq ft in terms of net lettable area by 2016, from 2 million sq ft currently.
He envisaged that in five years, it will have added another two shopping malls and three hotels, from three shopping malls currently. The two new malls are Paradigm Mall in Johor Baru that is expected to open in the third quarter of 2016, while Paradigm Mall in OUG is targeted to open in 2018.
Its sub-subsidiary WCT Malls Management Sdn Bhd, which currently manages the Paradigm Mall in Petaling Jaya and Gateway @ klia2 in Sepang, will continue to manage the two new malls.
"It (malls) may not be sizeable as our construction contracts, where every year we look at RM1 billion to RM2 billion worth of contracts but it is part of our overall WCT strategy to diversify our business. When times are bad, malls gives us a stable and steady recurring income that will help us cushion the down time of the construction cycle," Wong said in an interview recently.
Under the hospitality segment, the group will have no less than 1,000 rooms with three hotels in five years, from 250 rooms currently. The three hotels are New World Petaling Jaya Hotel (scheduled to open in October 2016), as well as two yet-to-be named hotels in Johor Baru (2017) and OUG (2019) respectively, which are all part of the Paradigm Integrated Commercial Development in the respective areas.
WCT recently appointed one of the region's leading hospitality groups, New World Hotels & Resorts to manage the New World Petaling Jaya Hotel.
"We've not decided (on the remaining two hotels) yet. It's either we continue with our own franchise premiere or we'll look for partners like Rosewood or New World, depending on the market segment that the hotel is located in," said Wong.
He added that the group will emulate the success of the Paradigm Integrated Commercial Development in Petaling Jaya to develop its plots of land in Johor Baru and OUG, as integrated development is the current trend and a proven business model.
Externally, he said Gateway @ klia2 is already a regional mall with 3 million footfalls per month while Paradigm Mall registers 1.3 million to 1.4 million footfalls per month, and these two malls attract about 4.4 million footfalls every month.
"We continue to reach out and we're trying to bring in other segments like tourists into our malls. With the weak ringgit, there is an opportunity for us and we will work with tenants to cushion this difficult time, as the mall business is a long term business and we should look at a longer horizon.
"Internally, we want to ensure we grow our team to prepare for Paradigm Mall Johor Baru and we're looking at putting our malls on REIT (real estate investment trust) and preparing our malls to be ISO-certified," said Wong, adding that the listing of the REIT will take another year.
Wong said with 2 million sq ft of retail malls now, its sees huge potential in three of its malls, where Bukit Tinggi Shopping Centre has entered its seventh year, Paradigm Mall in Petaling Jaya is already in its third year, while Gateway @ klia2 is seeing high traffic in only eight months.
"We feel it is a good mix of assets that can be parked into the REIT that may attract interest. Sometimes it may not be a mature mall but a mall that is growing so that we have upside potential," said Wong.
WCT has a landbank 1,100 acres that can last 15 years but it is also looking at land in Penang and other parts of Malaysia that can provide decent returns.
Original Source: www.thesundaily.my