Avillion’s land attracts interest
LOSS-MAKING AVILLION BHD
has received an offer for its land in Port Dickson from a China-based investment group.
Sources say that a group called Guangxi East Hangyang Investment Group has made an offer of about RM380mil to purchase six parcels of land that Avillion owns in Port Dickson, Negri Sembilan.
The offer includes the piece of land that houses one of Avillion’s main asset, namely the Avillion Hotel Port Dickson.
The rest of the land are mostly undeveloped pieces in Mukim Sri Rusa, Port Dickson, according to sources.
Guangxi East Hangyang, which was set up in the 1990s, describes itself as a company with a focus on high-end property development, hotels, food and beverage, tourism and entertainment. It also says it has partnered international brands such as Walmart and Mariott. The company has also inked a deal with the Fang Gang City Government (a local council in Guangxi province) to develop strategic cultural tourism projects. The group also owns the Nanning Champs Elysees Hotel in Nanning, Guanxi Province. They also own two shopping malls there.
According to sources, the China party after a study of suitable areas in Malaysia viewed Port Dickson as an area that has huge potential as a tourism destination. It is also said to be open to the idea of working with Avillion should the deal go through.
Going by Avillion’s 2018 annual report, its largest piece of land in Port Dickson is about one million sq ft, and it is undeveloped and part of the Admiral Cove development. It is on a leasehold for 99 years and last revalued in 2004.
In total, Avillion has about 3.4 million sq ft in Port Dickson area. With the exception of Avillion Hotel, Port Dickson and Admiral Cove Premier Integrated Marina Resort – which was revalued in 2019 – the other parcels were revalued between 2002 and 2017.
The book value of all its parcels of land in Port Dickson is close to RM260mil.
Other than Port Dickson, the group also has several parcels of land in Kuala Lumpur and one parcel in Langkawi.
Interestingly, Avillion is majority owned by the family of former finance minister Tun Daim Zainuddin, who is currently the economic adviser to the Pakatan Harapan government.
Daim’s wife Toh Puan Mahani Idris and son Datuk Md Wira Dani Abdul Daim emerged in the travel services provider and hotel operator in 2016, when the company was known as Reliance Pacific Bhd.
Mahani and Dani have a 247.29 million shares or 28.8% stake by virtue of their interests in Ibu Kota Developments Sdn Bhd.
Notably, a Feb 19 Bursa Malaysia filing showed that this block of shares have been transferred to a trust under Maybank Trustees Bhd.
The other major shareholder is the company is Mazmur Capital Sdn Bhd, which owns 28.91%. Mazmur is the vehicle linked to See Ah Sing, who in April last year returned to the company’s helm as managing director after retiring from the position two years ago.
Avillion is involved in three segments, namely tourism, hotel, and property businesses.
In the hotel segment, it operates the chain of hotels and resorts under the Avillion brand in Malaysia and Indonesia.
It has also introduced a new brand “Avi by Avillion” under a rebranding strategy offering three to four-star hotel chain, differentiating it from the upper four to five-star Avillion chain of hotels.
Its travel division operates travel and tour services that mainly cater to inbound tourist markets in Hong Kong and Singapore.
As for property, it is developing a 165-acre township of affordable mixed-use residential and commercial development in Bandar Tenggara, Johor.
Alas, the group has been loss-making for the last four financial years of 2016 to 2019. For the six months ended Sept 30,2019 it made a net loss of RM8.73mil on a revenue that declined more than 40% to RM34.92mil.
Hong Kong disruption
In notes accompanying those results, the company attributed the losses to the recent disruption in Hong Kong, which had resulted in a drastic drop in the number of tourist arrivals. It said it had also adopted a competitive pricing strategy in order to secure its revenue for the hotel business, which was affected by haze in September last year that saw many cancellations.
In October last year, the group announced plans to raise up to RM22.67mil via a private placement involving up to 20% of its total number of issued shares to independent third party investors.
The group hopes the exercise will help ease its cash flow requirements and facilitate its short and medium-term turnaround plans.
It plans to use part of the monies raised to refurbish its hotels and resorts and repay bank borrowings and some for its Johor property project.
Its borrowings as at end-September 2019 stood at 94.8mil.
With the Covid-19 coronavirus outbreak, it would surely be more challenging months for hospitality and tourism players such as Avillion.
Shares of Avillion closed two sen or 12.5% up to 18 sen on Friday, giving the stock a market cap of RM170mil.
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