This article first appeared in The Edge Malaysia Weekly on December 16, 2024 - December 22, 2024

TWO hotels under Berjaya Corp Bhd (BCorp) (KL:BJCORP) — Berjaya Beau Vallon Bay Resort & Casino and Berjaya Praslin Resort in Seychelles — have been put up for sale, sources familiar with the matter tell The Edge. 

While details are scarce, the price tag being bandied about for the two hotels is in the region of US$83 million (RM368.35 million).

At press time, BCorp had not responded to questions from The Edge on the potential sale.

The hotels are old properties, and BCorp’s ownership dates back to 1994 when it bought three resorts — the then Beau Vallon Bay, Praslin Beach and Mahé Beach at Port Glaud. While the Berjaya Mahé Beach Resort closed down around 2008, the other two are still operating but it is not clear how they are performing.

Online searches and BCorp’s earlier annual reports show that the 232-room Berjaya Beau Vallon Bay Resort & Casino was built in 1974 and renovated in 1992. The 79-room Berjaya Praslin Resort was built in 1983. The condition of the two resorts is not known, and the two are not on BCorp’s list of material properties in its latest annual report. BCorp currently owns and operates 31 hotels, 10 in Malaysia and the rest in Iceland, Sri Lanka, Japan, the UK, the Philippines and the Seychelles. 

B-Corp’s jewel in the crown is its award-­winning Four Seasons Hotel and Hotel Residences Kyoto, Japan, which is built around an 800-year-old heritage Shakusui-en, a pond garden, located in the in Higashiyama district.

To put things in perspective, the sale of the two hotels in Seychelles is unlikely to create a dent in BCorp’s earnings.

Apart from hotels and resorts, BCorp has a diversified asset base, operating restaurants and coffee outlets such as Starbucks Coffee, Kenny Rogers Roasters, Paris Baguette and Krispy Kreme Doughnuts, all held under its 62.51% owned subsidiary Berjaya Food Bhd (KL:BJFOOD). It also has 73.54% equity interest in property developer Berjaya Land Bhd (KL:BJLAND) and a 16.62% stake in Berjaya Assets Bhd (KL:BJASSET), which owns a few malls and hotels. BCorp also has 51.16% shareholding in number forecast operator Sports Toto Bhd (KL:SPTOTO), 36.65% in REDTone Digital Bhd (KL:REDTONE), an integrated telecommunications and digital infrastructure service provider, and 26.53% in Atlan Holdings Bhd (KL:ATLAN), which deals in duty-free and non-dutiable merchandise, auto components manufacturing, property investment and hospitality, to name a few.

For its financial year ended June 30, 2024 (FY2024), BCorp chalked up a net profit of RM428.89 million on revenue of RM10.09 billion. In FY2023, the group suffered a net loss of RM110.26 million on revenue of RM9.61 billion.

Earnings in FY2024 received a boost from gains on disposal of subsidiaries totalling RM498.33 million and a gain on remeasurement of retained equity interest in a former subsidiary of about RM154.05 million, without which the group would have been in the red.

However, BCorp’s hotels and resorts business arm has not been doing well. According to its FY2024 annual report, BCorp’s hotel and resorts arm narrowed its pre-tax loss to RM29.59 million from RM90.97 million in FY2023, on higher revenue of RM1.14 billion from RM937.44 million.

“The overall improvement of Berjaya Hotel Resorts’ operating performance is a testament to the ongoing recovery of the global tourism industry, although it has not yet returned to the pre-pandemic levels. As a result, Berjaya Hotel Resorts recorded a lower loss before tax of RM29.59 million, a 67.5% improvement from the previous year’s loss of RM90.97 million. The loss was primarily due to the increase in revenue being insufficient to fully offset higher operating expenses, finance cost and lease-related expenses,” BCorp says.

For FY2024, BCorp’s Malaysian hotels narrowed  losses to RM14.18 million from RM34.31 million in FY2023, while revenue grew 17% to RM248.22 million in FY2024 from RM212.82 million a year before. Group-wide average room rate increased 25.2% in FY2024 from the previous financial year, while the group-wide occupancy reduced to 53.3% compared with 56.1% in FY2023. However, the decline in occupancy rate was offset by the improved average room rate.

The current financial year has not started out well for BCorp. For the three months ended Sept 30, 2024 (1QFY2025), BCorp suffered a net loss of RM167.85 million on revenue of RM2.23 billion.

At end-September, BCorp had non-current assets held for sale of RM164.99 million. Its total assets were pegged at a whopping RM21.47 billion.

Its cash and bank balances stood at RM800.15 million, with deposits with financial institutions at RM941.23 million. On the other side of the balance sheet, BCorp had long-term borrowings of RM2.89 billion while its short-term debt commitments were RM3 billion. BCorp finance costs for the year were RM563.19 million. During the period in review, BCorp had reserves of RM737.68 million.

BCorp’s largest shareholder is Tan Sri Vincent Tan Chee Yioun, who has a 16.17% stake in the company. The only other substantial shareholder is Tan Sri Lim Kuang Sia of rubber glove manufacturer Kossan Rubber Industries Bhd (KL:KOSSAN), with 7.26% equity interest.

With his sprawling business empire, Tan is frequently in the news. Recently he and his partner His Majesty Sultan Ibrahim, King of Malaysia’s telecommunications company U Mobile Sdn Bhd, one of the smaller players in the telecommunications industry, was awarded the tender to build a second 5G network in the country, edging out larger rivals, CelcomDigi Bhd (KL:CDB) and Maxis Bhd (KL:MAXIS).

BCorp shares closed at 30 sen last Friday, giving the company a market capitalisation of RM1.75 billion. Since early August this year, BCorp’s stock has shed about 30% in value. 

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