THE major shareholder of Grand-Flo Bhd, soon to be renamed NCT Alliance Bhd, has an ambitious plan for the enterprise data collection and collation system (EDCCS) company turned property developer — to become one of the country’s top 10 property players. To achieve that, Datuk Seri Yap Ngan Choy, executive chairman and group managing director of NCT Alliance, has set a 10-year time frame.
Yap, who emerged as a substantial shareholder of NCT Alliance two years ago when he purchased a 53.32% stake through his private vehicle YBG Yap Consolidated Sdn Bhd, has been gradually transforming the Main Market-listed company into a property developer.
Known for his ability to give a new lease of life to abandoned property projects, Yap now intends to make NCT Alliance, his first and only publicly listed vehicle, a rescue vehicle for distressed property projects
“Our vision is to make NCT Alliance one of the top 10 developers in Malaysia in terms of market capitalisation within 10 years. Following the completion of our asset acquisitions in Genting Highlands, NCT Alliance’s market capitalisation is expected to reach RM600 million to RM700 million. But as we continue to grow and undertake more projects, I believe our market capitalisation could reach RM1 billion next year,” he says in a virtual interview with The Edge.
Whether this is achievable remains to be seen, given the prevailing weak sentiment in the property market. Shares in Grand-Flo have almost doubled year to date to close at 63 sen last Thursday, giving the company a market capitalisation of RM377.21 million.
Recall that YBG Yap Consolidated, which is jointly controlled by Yap and his younger brother Datuk Joe Yap Fook Choy, surfaced as a major shareholder of Grand-Flo in July 2019. Their shares were acquired from Grand-Flo’s previous owners, who include founder Derrick Tan Bak Hong, his wife Yap Li Li and his business associate Chuah Chew Hai.
It is worth noting that Grand-Flo had on June 11 obtained shareholders’ approval at its extraordinary general meeting to change the company’s name to NCT Alliance. Following the implementation of the Full Movement Control, the company was unable to submit an application to the Companies Commission of Malaysia to effect a name change as the latter’s office was closed, hence NCT Alliance’s proposal to change its name has been extended until July 16.
Yap, 64, notes that his privately owned NCT Group of Companies started as a tiling contractor in 1976, before venturing into the construction and property sectors in the 2000s.
“We took over Grand-Flo and extended the general offer in 2019, and it has been a refreshing journey so far. Frankly, the learning curve was quite steep over the past two years. Although we have been running businesses for many years, I must say managing a public-listed company is not easy; it’s a totally different ball game,” he says.
According to him, NCT Alliance has four to five ongoing projects in the pipeline. Its two major projects in Genting Highlands, namely Grand Ion Majestic (GIM) and Grand Ion Delemen (GID), will be the largest earnings contributors to the group in the coming years.
NCT Alliance also has a joint-venture project in Perak called Mahkota Kampar, a residential project in Bandar Baru Salak Tinggi known as Acacia Residences, as well as a project in Penang called The Vortex, which it took over from Grand-Flo’s previous management.
“All the remaining legacy businesses, including the EDCCS and barcode label businesses, have been disposed of. Going forward, NCT Alliance will focus solely on property development, specialising in the rehabilitation of abandoned projects. Having said that, if the opportunity arises, we might also launch and undertake new property projects,” Yap says. NCT Alliance had sold its EDCCS business to retail technology solutions provider Radiant Globaltech Bhd last year.
Revival specialist
NCT Group is a diversified group that is involved in the construction, property development, property management, property investment and hospitality businesses.
Yap points out that the group has been making annual profits of RM20 million to RM30 million, and would have qualified to go public via direct listing.
“However, we came across Grand-Flo a few years ago and it caught our attention because it was also involved in the property and construction businesses. We thought Grand-Flo was a perfect fit for us and decided to take over the company instead,” he says.
He adds that NCT Group has been actively building its property development division over the past seven to eight years, and believes the timing is right for the group to spin it off to a listed vehicle.
“Moving forward, as far as our property business is concerned, we will shift our focus to NCT Alliance. We will focus on growing the listed company, which is essentially the property arm of NCT Group. We do not discount the possibility of injecting more assets and businesses from NCT Group into NCT Alliance, but they will have to be earnings-accretive and create shareholder value for everyone.”
NCT Group had a breakthrough in 2008, and this turned out to be a game changer for the company. “We did a good job as the main contractor for an abandoned project and, subsequently, the Ministry of Housing and Local Government (KPKT) invited us to participate in the rehabilitation of the country’s largest abandoned project, followed by the largest abandoned project in Pahang. That’s how we made a name for ourselves in this niche market,” Yap recalls.
Based on KPKT’s data, there are around 200 abandoned residential projects in Malaysia. Yap believes the actual number could be higher because KPKT’s data does not include the abandoned projects that do not come under the Housing Development Act.
“Bear in mind that residential is just one area that we can enter; we have not even talked about commercial projects, especially in the Klang Valley. There are plenty of opportunities for us to revitalise abandoned commercial and industrial properties,” says Yap.
He says profit margins from rehabilitating abandoned projects are usually better than that from conventional projects.
Yap opines that with the Covid-19 pandemic, the business environment is becoming more challenging than ever and, hence, he will not be surprised if there are more abandoned projects in the next four to five years. For those that pass feasibility studies, NCT Alliance would be keen to go in as a white knight.
“Not many developers like to revive abandoned projects because it involves a lot of complicated legal and regulatory processes. More importantly, you need to have a strong team to manage the construction costs because abandoned projects usually incur a lot of hidden costs,” he notes.
“Fortunately, we have the knowledge and expertise to overcome these challenges. You need to have experience in dealing with the authorities, purchasers, banks and liquidators. Without any proven track record, it will be very difficult for you to convince them that you can deliver. Don’t forget that house buyers have already been the victim once, and don’t want to be the victim for the second time.”
NCT Alliance’s net profit more than doubled to RM5.6 million in the financial year ended Dec 31, 2020 (FY2020), from RM2.6 million a year ago. The group is hopeful about maintaining a strong growth momentum in the next two to three years, mainly driven by the two Genting Highlands projects.
Yap believes that NCT Alliance’s stock is currently undervalued. “Being a listed company engaged in the revival of large-scale abandoned projects, I think our counter deserves a premium in terms of valuation. Why? Because the conventional property players can launch new projects when the market is good whereas NCT Alliance has another way of making profits, even when times are bad. That’s our unique selling proposition.”
Source from The Edge Markets
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