TAFI Industries Bhd, a furniture maker, turned developer, is breaking new ground in property development in Pahang despite the ongoing Covid-19 pandemic.
The company said yesterday in a stock exchange filing that it would build five mixed housing projects in Kuantan, with a total gross development value (GDV) of RM621.5 million.
For the developments, TAFI's wholly-owned subsidiary Gerak Mahir Sdn Bhd (GMSB) has signed five joint-venture (JV) agreements with numerous landowners in Kuantan.
GMSB will shoulder the development costs, while the JV partners will contribute the development land, according to TAFI.
"The total consideration will be split 50:50 between GMSB and the relevant JV partners," it said in a stock exchange filing yesterday.
According to the filing, the most significant venture is with Jaringan Fajar Sdn Bhd (JFSB) to build semi-detached houses on about 25 hectares (ha) in Bukit Pelindung. The GDV for this project is RM177.8 million, TAFI said
Two separate JV agreements were entered into with Pembinaan Alamku Sdn Bhd (PASB) to build terraced houses and shops with a combined GDV of RM291.3 million.
They will develop the properties across 50.6ha in Chendor, and Kampung Baging.
TAFI said that GMSB also entered into a JV with Pembinaan I-One Sdn Bhd to develop terraced houses, shops and commercial plots over 32.7ha in Penor.
In Kuala Kuantan, GMSB will build terraced houses and shops on 13.2ha in a JV with the landowner, Kotamas Development (M) Sdn Bhd. The estimated GDV arising from this project is RM31.3 million, TAFI said.
Maiden venture
Last year, TAFI entered the property market by launching its flagship project in Habu, Cameron Highlands, through a conditional joint venture (JV) with E Prompt Sdn Bhd.
The project has a gross development value (GDV) of RM390 million and will span 13.35 hectares (ha).
The JV project allows TAFI to take part in development without having to own land outright.
Lake Gardens Sdn Bhd owns the land and has a JV agreement with E Prompt to develop it. The JV agreement also allows E Prompt to engage in joint development agreements (JDAs) with third parties for the project.
Under the JDA, E Prompt shall be entitled to a range of 16 per cent to 25 per cent of the total number of completed apartment units and townhouses, being the main component of the development project.
E Prompt will also be entitled to 35 per cent of the completed units of shop lots, while Tafi will be entitled to all the remaining units built on the development land.
Revenue from the company's property development business would begin to roll in from the financial year 2022, according to TAFI group chief executive officer Datuk Wong Sze Chien.
The main contributor will be the project in Habu, he said.
TAFI reported its financial performance for the second quarter ended June 30, 2021 (2QFY21).
Its net loss narrowed to RM744,000 from RM1.31 million a year ago, thanks to higher export sales of furniture.
Quarterly revenue increased 8.2 per cent to RM5.91 million from RM5.46 million.
"Despite the higher shipping cost and operation lockdowns, furniture orders remain on track from overseas markets for the group to deliver a profit for the financial year ending December 31, 2021 (FY21)," he said.
On the prospects of the furniture business, Wong said the company's entry into the North American market had shown positive results, and it will continue to expand on market share.
"We are also expanding our market share in the European and Middle East markets to widen our customer base. Besides, we have ventured into property development and local projects for supplying (our) furniture," he said.