Company its tolerance with short-term period volatility. The
Company investment profile.
1. Objective of investment.
Our company main objective is make sure that we will get the higher profit and stable long-term capital growth at lower risk.
2. The investment risk profile.
Our company searching for the best investment with moderate risk for long term period but also its tolerance with short-term period volatility. The risk that we have to prepare is market risk which is volatility in market price, liquidity risk which is the insufficient cash, credit risk which is the risk that the company unable to pay back debt, interest rate risk which is the risk of fluctuation in interest rate, country risk, currency risk that happen when the value of Ringgit fluctuation and concentration risk. We use the method in our portfolio to diversify our risk by investing in different type of industry.
3. Expected return on investment.
By making a good strategy to choose the best investment, our company expect to get at least 50% return for our portfolio in a short-term which is not more than one year and 95% expected return for the long-term period. We will make sure that we will able to get that expected return by diversify carefully our investment portfolio.
4. Sources of fund for investment.
Hong Leong Trust Berhad obtain the fund from our own subsidiaries which is Hong Leong Assurance Berhad. The money that be invest to Hong Leong Assurance Berhad will be invested to our trust which including collective investment scheme, owner equity policy, foreign asset , derivatives and money market, fixed income and etc. All the fund obtain from Hong Leong will be invested back by our company to generate more money.
5. Amount of fund available for investment in bond.
Our company will invest around RM 10 000 000 to the chosen company that can give us the expected return that we want. We will chose only 4-5 company only to make sure our portfolio is easy to manage and able to give maximum profit. The allocation of fund will be make based of the performance of that company and how good their management. We also will invest to company that have a strategic location to make sure that company able to give us the return that we expect.
Economic and Industries Forecast 2018-2020
1. Malaysia economic condition.
As we known Malaysia a developing country. Since independence, Malaysia had one of the best economic records in Asia, with its GDP growing average of 6.5% per annum for almost 50 years. The economy of Malaysia has traditionally been flued by our natural resources since we having a lot of natural resources such as oil and gas, agriculture and commodities. However, Malaysia is expanding its sectors by getting into science, tourism, commerce and medical tourism. Todays’ Malaysia unprecedented and recent development that growth rapidly has attracted millions of migrant workers from across Asia recent this year. Besides that, Malaysia has a newly industrialized market economy, that were ranked 4th largest in southeast Asia and 38th largest in the world.
With having 4.9% growth rates as stated on the news the star online and GDP per capital of $9,766 and HDI of 0.78 currently the world bank has classified Malaysia as an emerging economy. The international monetary fund (IMF) also classified Malaysia as emerging and developing countries. This classified indicates Malaysia is in a good growth. Today current expansion on the economic is expected to remain robust. Despite the year that it was hit by the global financial crisis which is in 2009 we Malaysia manage to recover rapidly, posting growth rates average 5.7% since 2010. This show a significant management of a developing country.
Malaysia to be forecast to growth more on GDP by 5% next year and 4.9% in 2019. This prediction reflects how we seeing the macroeconomic fundamentals’ performance of the country and the baseline scenario. What Malaysia do todays’ by having many incentives on developing the country such as Malaysia vision valley (MVV) and many Gagasan and Dasar that been introduce by the prime minister of Malaysia Dato’ Sri Haji Mohammad Najib bin Tun Haji Abdul Razak which is the sixth prime minister of Malaysia will be expanding the country growth on becoming toward the developed countries one day.
2. Industries forecast.
Fundamentally the property industry runs alongside with the economy of Malaysian countries. As it was reported in CBRE/WTW’s reports, domestic consumption rose, driven by spending in areas that include F, transportation and communication. This make the government consumption also grew according to year-to-year basis with the expenditure owing to infrastructure. This gives many benefits to the contractors and development industries.
As the increasing population of Malaysia and the upcoming visitors from across the world with Malaysia unprecedented and recent development that growth rapidly has attracted millions of migrant workers from across Asia. The living environment in these developments is more compact, but the quality of life is maintained or made better. Young adults have a tendency to look for things to do as in their lifestyle can be described as ‘living out’ as opposed to ‘living in’, which is the desire to spend time at home. The young want to socialize, engage and connect with each other and they are looking for property that enables this lifestyle the forecasting development on the condominium giving a significant attributes and chances for the investor and developers to take part on this industry. It a good time to start investing on property and on upcoming years the price on the property would be increase from year-to-year.
Based on the news star online among the companies that started as furniture makers, LCL Corp Bhd is the most successful in exporting well-designed products with high profit margins. Comparing LCL Corp Bhd with global furniture giant Ikea of Sweden may seem inapt. LCL designs and installs luxurious furnishing and interior decor for commercial properties whereas Ikea sells furniture mainly to middle-income households. However, today youngster and economic condition the Malaysian is more prefer on low-cost object and diy style this make ikea will be successful in future. So making ikea will becoming one good development.
c. Office building
The general consensus among developer more toward the mixed-use development will be built across the country over the next 5 to 10 years all those project, which incorporate this development of offices. The next generation is more likely making own business oriented mind-set. Young property buyers have different expectations and they want facilities that allows them to live in certain working experience lifestyle. So, the developer is building an environment that foster the desired life style like in this case it is a good opportunity to start on.
d. Shopping mall
The property market outlook for 2017 has been forecast to be lukewarm but still quite encouraging. Especially on some sectors of the property industry have begun to show gradual signs of recovery and it increasing significantly. With the mode of increasing demand in the property such as retail sector, consumer confidence in the local real estate market will continue to consolidate further. Furthermore, the retail mall industry is said to be pretty robust and could weather almost any storm or future challenges. These days, shopping malls are mushrooming everywhere you turn your head. Almost all property developers these days have their own signature or iconic malls, as well as mall developments still in progress. For some developers, retail malls are big business. It also a good place to place money on investing.
IMPRESSSIONS ON COMPANY AND PROJECT
PROJECT 1: KIMLUN (COMMERCIAL OFFICE)
KIMLUN has explained a great detail on their commercial office project. The project is good to be developed since nowadays, the lands and real properties are having a very high demand. There are many entrepreneurs that are coming to the market today. As for sure, they are looking for a space to be an office for their business. Unfortunately, the price of an office these days are very expensive. Thus, the idea of KIMLUN to build the commercial office is highly praised.
Based on the report we can see that, this commercial office is located in a very strategic area. It is also surrounded with great facilities. With those facilities nearby, they can attract many entrepreneurs or any company to rent an office there. It can allow KIMLUN to gain a lot of profit which can benefits the investors too.
However, there is a weakness in the commercial office. The project somehow seems irrational to put in 20 offices in a floor where in an office can only fit in about just 5 people in it. The office is quite pricey but the square feet of the office are quite small and there is not much of the safety precaution taken by the developer other than the smoke detector. There is only one emergency stairs provided in floor that fit in about 100 people at a time. Therefore, we can see that for this commercial office, they are lack in the matter of safety.
Despite all that, we cannot agree more on KIMLUN’s decision to provide collaterals offered to the bond holders such as commercial building and property that they have. By doing that, the investors are gaining the confidents and feeling secure to buy their bond.
PROJECT 2: HO HUP CONSTRUCTION (CONDOMINIUM)
HO HUP is a very well-known company that we cannot deny their credibility. They had involved in many big construction project such as the building of Kuala Lumpur City Centre (KLCC). Now, they come out a proposal to build a condominium in Kelana Jaya. The project is good to be developed since nowadays, since in the millennial era, many people are looking for home. By build a condominium it is a very good decision since the price of the home on land are very pricey and the price of the land itself are very expensive.
Based on the report we can see that, this condominium is located in a very strategic area. It is also surrounded with great facilities. In the condominium itself they are providing many facilities to the buyers. This can attract many people to buy the house especially for the youngsters.
However, there is a concern for this project. HO HUP aimed to build a luxury based condominium units. The price of a unit is about RM1.2 million. With the fluctuation of economies and the high cost of living, it can be disadvantages for the project.
Even though they stated that, the population of the Malaysian is increasing and it is undeniable that people are getting richer day by day but this condominium can only targeting the high income buyers. This can narrow the target market or the potential buyers. This might be causing the condominium units are not fully sold and may cause lost to the developer also to the investors since, the area of Kelana Jaya also has provided many other condominium with a lower price with the same facilities of the KJ 8 Condominium proposed by HO HUP Construction.
PROJECT 3: BREM HOLDINGS BHD (SHOPPING MALL)
BREM has a very bright vision on the shopping mall project than going to be built in the Port Dickson, Negeri Sembilan. Mainly, we knew that in Port Dickson there is no big shopping mall. They only have the basic malls just to fulfil the need of the residence. As from here we can see that they really good at taking the opportunity.
The government of Negeri Sembilan also has been planning to improve the facilities in Port Dickson, so that many tourists can come over to visit the amazing beach which is the pearl of Port Dickson. BREM chose to build their shopping mall facing the beach. That is a great thing to do since it can allow the people who come to their shopping mall to appreciate the beauty of the beach. Another smart decision did by BREM is that they decided to provide an ice-skating rink in the mall so that not only get to attract the community of Port Dickson but also the people who is living in Seremban also Melaka. This can give them a lot of profit which give advantages to the investors too.
It’s a good thing that BREM did banned any outlet or shop that going to open the business that can disturb the family friendly environment of the mall for example, by opening a pub. This is because as we know, the community in Port Dickson are mainly Muslims. Therefore, it is for sure that most of the customers who came in are the Muslims. This is where you can see many people will come to the mall and the potential to face a lot might be low.
PROJECT 4: IKEA GROUP (RETAILS)
The project that IKEA GROUP proposed is to open up a new branch of the IKEA in Seberang Perai, Penang. It is a good idea since they can attract more people from the North of Peninsular Malaysia. Although, they already had a branch in Batu Kawan which is about 22 minutes away from Seberang Perai. This is not going to be disadvantages to any of the developer also towards to the investors since they are just the same company based.
Based on the report we can see that, this new IKEA branch are going to be build nearby to the housing area. This is good opportunity since they are targeting the communities of the housing area to come to their outlet, just like their branch in Cheras. The main purpose for IKEA is also to let the household to have high quality products with a cheaper price. Therefore, it is a good thing they choose the area. According to their report, IKEA GROUP said that there are many facilities provided surrounding the area such as restaurants, banking institutions and since it is just nearby the main road therefore, there would not be any problem on the public transport that can be use by the potential customers to come to the supermarket. With those facilities ,they can attract many people to come and this can be allow them to get more profit which will benefits us the investors.
IKEA GROUP did mention in their report that their coupon rated is 8% and they did said that they are going to pay a high coupon rate with RM100 million within 7 years. This causes some worrisome towards the investors. However, during the meeting they explained that they are running the business with a target income that are must be 21086325.00 euro in total to payback the investors. That can be accepted since IKEA have many more outlets around the world. Thus, it is possible for them to get such a big amount in a short period of time. Due to that reason, they also let the investors to feel more secure and confident to invest in their company also for the project.
D) Investment Decision (Investment Feedback)
Investment Fund Allocation for Investment
Fund Available for Investment: RM10, 000,000
Fund Invested (RM)
Balance not invested
Condominium by Ho Hup Construction
i) The location itself is suitable to build a condominium as there are many facilities provided such as MRT and shopping mall that we think they are able to attract home buyers.
ii) The price offered is affordable as they provide many facilities for the house owner such as private swimming pool; high technology used which we ensure that they are able to sell their condominium apart from the high demand of people seeking for house for investment or as self-property.
Ikea by Takaful
i) The company is already well known thus will ensure the company will able to generate profit and able to pay investors. Moreover the business is not only focus on selling furniture, they are also known for its famous restaurant which is indirectly can increase company’s profits.
ii) The building is located in Penang which we think it is a strategic place to attract customers as Penang is known as one of the most touristic locations of Malaysia that could enhance company profits.
Office building by Kimlun Bhd
i) The past performance of Kimlun shows that they are able to pay the investors which we ensure that Kimlun are able to provide us good return in future.
ii) The building is located strategic place as it is in business spot area which is suitable for their project.
Shopping Mall by Brem Holding
i) Investing in shopping mall is less risky and safe as the risk is diversified, but, high return.
ii) The company have a very great strategy to attract potential customers, such as providing ice rink for skating that could ensure high profits to the company.
E. Report on Funds raised for G Ashe Ashe Hotel.
Amount of Fund Raised Template.
Fund Targeted for Project :RM 100 000 000
Fund Received (RM)
Public Mutual BHD
15 000 000
40 000 000
20 000 000
25 000 000
100 000 000
Future plan on fund raising for next project.
1. Make a loan from several bank
The first planning if our company have insufficient is we will make take a loan from several bank to cover our operation cost. We will use our existing building as the collateral to make sure the borrowing process is more easy and efficient. We also will make a agreement with the bank to pay back our loan in more than 10 years to make sure we have making much profit in order to pay back our loan effectively. The loan being taken also is not in high amount because the fund majority come from our bondholder. We only take a loan if the fund in not enough to cover our project but it is enough we will cover it only with our bond fund.
2. Increase our sale.
In order to cover up our new project cost, we will increase our sale by making a lot of promotion. This method can make us cover our insufficient cost using our own profit without increasing our liability. We have a lot of hotel in the world with a strategic location that can attract more customer easily. Our hotel also give the very affordable price to our customer make our customers prefer our hotel compare to our competitors. Last but not least our hotel location in the most strategic location in around the world make us easily obtain more profit to cover up our insufficient fund for our current project and next project.
3. Issue more common share.
Another planning for fund raised to G Ashe Ashe hotel is our company will issue more common share to increase our fund to our next project. By issue new common share can increase our equity to make sure we have sufficient amount of fund to cover our project. We also can maintain our liability because higher liability is not good for our company financial performance. We will sale our share to only for selected investor to make sure will able to get the fund in the short period without face any problem in the future. We also decide to choose our investor because investor will become one of our owner so by choosing a good investor can increase our company reputation and make our company will be more trusted by other customer and investor for future.