Malaysia-based Ho Hup Construction Co Bhd is set to make its entry into Myanmar’s lucrative property market through a joint venture with local conglomerate Zaykabar Co Ltd.
The firm’s 70 percent-owned unit, Ho Hup Myanmar, signed a joint venture agreement with tycoon Khin Shwe-owned Zaykabar for “Z Villas 191 Units Land” development in Mingalardon Garden City in Yangon.
In a filing with Bursa Malaysia, Ho Hup announced that it would develop a high-end residential property project with a gross development value (GDV) of $200 million (RM636 million) in central Yangon.
Zaykabar is the registered holder and beneficial owner of “Z Villas 191 Units Land” where it has agreed to grant the sole and exclusive rights to develop the land to Ho Hup Myanmar into residential units.
According to the deal, Zaykabar will be entitled to a sum of cash equivalent to the aggregate of the land cost which is pegged at $40 per square foot and shall have 60 percent of the total net profit of the project.
Ho Hup said its main role was to provide technical expertise in design, construction and project management and did not invest in the development land which was owned by Zaykabar.
The firm said it would take the opportunity to scout for other projects in Myanmar while building up its local presence.
It said the JV would enhance future earnings of the group through the net profit sharing of Ho Hup Myanmar.
Zaykabar was previously involved in developing the Royal Mingalardon Golf and Country Club, a 113.3-hectare golf course, and the Mingalardon Garden City project in Yangon.
Malaysia’s BIMB Securities revised its target price for Ho Hup Construction Co Bhd to RM2.26 per share, following the construction company’s announcement.
“We are positive with this move as it represents Ho Hup’s maiden project in Myanmar. We believe this is the best opportunity to scout for other projects in the country,” BIMB Securities said in a note.
“GDV of the project is expected to be around $200 million and first launch will be by mid-November 2014.
“Therefore, we are leaving our FY14 forecast unchanged and revised our earnings projection for FY15 higher by 11.6 percent to RM110.3 million from RM98.8 million.”
