Admiral Tan Sri Dato’ Setia Mohd Anwar
bin Hj Mohd Nor (Retired)
Chairman / Independent Non-Executive Director
On behalf of the Board of Directors of Titijaya Land Berhad (“Titijaya” or “the Group”), I am pleased to present the Annual Report and Audited Financial Statements for the financial year ended 30 June 2022 (“FYE2022”).
Tentative Recovery Weighed by Geopolitical Development
In the third year since the arrival of the COVID-19 pandemic, the Group continues to experience the lingering and yet-to-dissipate effect of the pandemic. While the nations globally transitioned towards endemicity, most if not of all the countries are not out of the woods yet as increasingly gloomy global developments in 2022 began to emerge attributing to the economic downturns and slowdown. This was further perpetuated by the irrepressible inflation environment, on the back of high commodity prices, in the United States, developed as well as developing economies especially China. The negative spillovers from the Russia-Ukraine war are also not seeing any signs of easing, causing further strains to the already weakened global outputs and supply chain from the COVID-19 pandemic.
In 2021, Malaysia’s Gross Domestic Product (GDP) saw a growth of 3.1% as compared to a contraction of 5.6% in 2020, providing Malaysia with the hope that the country’s trajectory would stabilise in the endemic phase, blessing it with a return to normalcy. The economic recovery traction for Malaysia is expected to continue its momentum as the economy transitioned toward endemicity beginning 1 April 2022 with reopened economic activities and international borders. The domestic demand continued to see strength-to-strength growth, underpinned by the recovery in labour market conditions and ongoing policy support by the Government.
I am proud to share that the Group, with its steadfast management team as well as employees, managed to emerge stronger amidst the various tumultuous environment. Key challenges that the Group faced were the extensive lockdowns as well as intermittent stop-work orders, supply shortages attributed to the restrictions of foreign labour import, rise in raw material prices as well as tight labour markets, which regrettably impacted the Group’s financial performance in FYE2022.
As the saying goes, great sea captains are made in rough waters and deep seas, the same goes for the Group where the ostensibly challenging environment will propel the Group to move forward, strengthened to endure future downturns in charting a sustainable future. The Group’s vision to continue driving strong value propositions by offering innovative homeownership packages and value-oriented product offerings that customers want remains true to this day.
INDUSTRY OUTLOOK AND PROSPECTS
Tighter Times Ahead and Resilience is the Key
The International Monetary Fund has forecasted for global growth to decelerate from 6.1% in 2021 to 3.2% in 2022, tapered by the tightening monetary policy globally as well as the lingering supply-demand imbalances across economies, increasing the downside to the risk outlook moving forward. The global growth outlook remains subdued as it continues to be affected by the developments surrounding the heightened geopolitical tensions, the Fed’s aggressive monetary tightening and the continued zero-COVID19 policy by China.
That said, the pace of economic recovery for Malaysia is expected to continue its upward momentum as the economy began to acclimatise itself to the normalcy that the endemic phase has brought forth. The resulting positive spillover from the re-opening of the economic activities and international borders as well as Malaysia being the beneficiary of the global demand and higher domestic private and public investments is anticipated to lift Malaysia’s GDP at a faster pace of between 5.3% and 6.3% for 2022. The firmer footing is a result of sustained domestic demand amidst the positive traction seen in the export growth as a result of the transition to endemicity from April 2022 which was supported by the full reopening of the economy and the international borders.
Needless to say, not all would be rosy, in anticipation of the elevated inflation continuing to persist in 2022, as Bank Negara Malaysia (BNM) is expected to follow through with its monetary tightening stance in line with the monetary measures taken by central banks in major markets globally no thanks to the growing global inflationary pressures amid the rise in commodity prices and persistent disruption to supply chains as a result of the adverse impact from the on-going Russia-Ukraine conflict. As of 8 September 2022, the Monetary Policy Committee of BNM has raised rates three times moderately throughout 2022 to 2.50% from 1.75% in 2021.
The property sector is expected to continue to face headwinds as the challenges that have shrouded the landscape in 2021 are expected to spill over into 2022 with further uncertainties caused by upcoming interest rate hikes and supply chain disruptions, escalation of the inflationary environment, posing further pressure to the already weakened purchasing power of the consumers. The jump in building material prices as well as labour shortage have also translated to higher construction costs, further squeezing the prospects and growth of the real estate market moving forward. As the scarcity of the labour supply is wide-reaching, the impact has also seen its impact on other sectors, especially the services industries, namely food and beverage and hospitality industries.
That said, to prop up and provide support in effort to reinvigorate the real estate market, in July 2022, the Prime Minister of Malaysia, YAB Dato’ Sri Ismail Sabri Yaakob, announced that first-time homebuyers will get a stamp duty exemption for homes valued RM500,000 and below, while properties between RM500,000 to RM1mil will be eligible for a 50% discount on the instrument of transfer and loan agreement under the Keluarga Malaysia Home Ownership Initiative (i-MILIKI). The Malaysian Government, through Budget 2022, improved the scheme through the provision of guarantees of up to RM2 billion as well as increasing the financing limit guarantee from RM300,000 to RM400,000, in an effort to increase the number of participants from targeted groups including young people, gig workers and micro-entrepreneurs to enable them to own their first homes.
As the Group looks beyond the traditional property development business, we have continued to deliver value to all our stakeholders in our efforts to diversify into growing long-term sustainable income for the Group. In June 2022, the Group announced its partnership with one of the world’s largest logistic companies, DHL Properties (M) Sdn Bhd (“DHL”) to develop an ultra-modern logistics commercial complex facility for the electrical and electronics sector in Bayan Lepas. This diversified business complements the Group’s diversification effort to increase the resiliency of the income base. This partnership marks our maiden venture into the premium semiconductor facility and has also validated the market’s confidence in the Group’s construction and development capabilities.
Amidst the challenging yet opportune times, the Group continues to closely monitor and focus its effort to price the product offerings competitively in the affordable segment to further strengthen the domestic foothold. This strategy has proven well in these dynamic markets where the only thing constant is change, and to change fittingly to the fluid environment will be the Group’s emphasis moving forward in order to remain resilient until the storm subsides.
PROFIT WITH PURPOSE
This year, Titijaya has developed an ESG framework that outlines the Group’s approach and strategy toward sustainable development through four key core pillars, Economic, Environment, Social, and Governance, aligned with the United Nations Sustainable Development Goals (“UNSDGs”). This is an important milestone for the Group as a responsible property developer, where we strive to develop, invest, and manage developments sustainably. The Group’s Sustainability Statement can be found on page 35 to page 52 of this Annual Report, detailing information on the achievements and the framework that guides the Group’s initiatives moving forward.
The Group take cognisance of the ongoing difficult time as well as the Group’s current working capital and capital expenditure requirements, the Board of Directors opine that it would be prudent to not recommend any declaration of dividend for FYE2022 after a thorough assessments to preserve the Group’s firepower in these uncertain and challenging operating landscape.
To close the chapter behind us, on behalf of the Board of Directors, I wish to express my utmost gratitude to my esteemed Board members, senior management and employees for their professionalism, resilience and ability to navigate the challenges in FYE2022. I would also like to extend my deepest appreciation to our faithful shareholders, capital providers, business partners, suppliers, customers and employees for their support in being with our business.
Admiral Tan Sri Dato’ Setia Mohd Anwar Bin Hj Mohd Nor