Hatten Land eyes the metaverse but struggles to meet prosaic deadlines for results, AGM

HATTEN Land has faced difficulty this year putting together its financial statements, because of Malaysia's "movement control orders" to curb the spread of Covid-19.

On Aug 3, the Catalist-listed Malaysian property developer said it had applied to the Singapore Exchange (SGX) for 60-day extensions of deadlines to announce its financial statements for FY2021 ended Jun 30 and to hold its annual general meeting (AGM).

"The group's employees have been unable to access the office premises since May 2021 and therefore the financial team faced difficulties in preparing the financial statements as well as providing financial information to the auditors for audit purposes," said the company, which is headquartered in the historic Malaysian city of Melaka.

If only Hatten Land existed in the metaverse, where its employees and auditors could transcend physical space and publish its financial statements and hold its AGM in a timely manner.

As it happens, Hatten Land is already imagining what the metaverse could do for its business.

On Oct 7, the company said it will collaborate with an entity known as EnjinStarter to develop a "digital twincity" for Melaka, where it currently operates four hotels and some six million square feet of retail space.

"Mirroring the physical world, Digital Melaka will feature the rich heritage, activities and key attractions in Melaka as well as Hatten Group properties in digital format. This will allow digital assets, including tokens and NFTs (non-fungible tokens), to be created and monetised," the company said.

The idea of a metaverse - or a digital world that is interoperable with the physical world - is something the biggest US-listed tech companies are now pursuing.

Facebook chief executive Mark Zuckerberg described it in a recent media interview as the successor to the mobile Internet, and perhaps the next best thing to a teleportation device.

"This is a persistent, synchronous environment where we can be together, which I think is probably going to resemble some kind of a hybrid between the social platforms that we see today, but an environment where you're embodied in it," Zuckerberg said in the interview.

Hatten Land said its project with EnjinStarter will kick off in mid-October. The delivery of the token system and its crypto-related elements are due at the end of March 2022.

The company said in response to queries from SGX that EnjinStarter was co-founded by Prakash Somosundram, who started out in the digital and technology industry in 1999 and has been involved in blockchain and cryptocurrencies since 2016.

Other investors in EnjinStarter include "notable parties" in the digital and blockchain industry, including Shashwat Gupta from Altcoinbuzz, Gabby Dizon from Yield Guild Games and Garlam Won from Momentum 6.

New ventures, placement

Hatten Land's bid to create a "metaverse city" of Melaka is just the latest digital-economy venture it has announced over the last few weeks.

On Sep 16, the company said it had signed a memorandum of understanding with mainboard-listed Singapore Myanmar Investco (SMI) to explore the possibility of SMI installing up to 2,000 cryptocurrency mining rigs in Hatten Land's properties in Melaka.

To make this a "green" venture, Hatten Land has teamed up with Bursa-listed Nestcon to install solar panels and facilities at Hatten Land's malls in Malaysia. As a start, the two companies will install and manage 6,373 solar panels capable of generating 3.19 MWp of energy at Dataran Pahlawan Melaka Megamall.

Hatten Land also said on Sep 16 that it would raise more than S$1.8 million through the placement of 80 million new shares at S$0.023. Each placement share comes with a detachable warrant convertible into a new share at S$0.048.

The company said the placement would be taken up by three parties: Asdew Acquisitions (40 million shares), Evolve Capital Management (20 million shares) and Ong Toon Wah (20 million shares).

Following the placement and the full conversion of warrants, Hatten Land's outstanding shares will swell from 1.6 billion to 1.8 billion. The three placees will own 9.1 per cent of the company's enlarged share base.

Then, on Sep 29, Hatten Land said it had sealed a deal with Frontier Digital Asset Management, a company founded by three undergraduates at National University of Singapore, to share proceeds from jointly operating at least 1,000 cryptocurrency mining rigs at its properties in Malaysia.

Combined with its SMI deal, Hatten Land could eventually have up to 3,000 rigs operating at its properties.

"Hatten Land is re-purposing its extensive mall footprint as part of a broader strategy that includes blockchain activities, online-to-offline commerce and renewable energy," said Hatten Land's executive chairman Colin Tan.

"We believe this agreement will augur the transformation of Hatten Land's assets into a hub for blockchain and other digital activities that will contribute to the growth and transformation of Melaka," he added.

Positive market reaction

For now, it isn't clear what all this will mean for investors.

Responding to SGX queries on Oct 11, the company said its token strategy was still under development but is likely to be linked to the loyalty points system of participating hotels, malls and shops.

The company also said it has not yet consulted its auditors on how the digital assets and tokens would be valued on its books. It was also unable to say if the tokens would be construed to be securities or capital market products that would be regulated under the Securities and Futures Act.

The market seems to think Hatten Land is on to something though.

Hatten Land began trading on Catalist in early 2017, following the reverse takeover of VGO Corp at S$0.325 per share and a compliance placement at S$0.28 per share.

Over the ensuing five years, amid disappointing financial results, the stock fell more than 90 per cent. Just before its Sep 16 announcement, it traded at S$0.025.

Since then, the stock has bounced sharply on heavy volume. It closed at S$0.078 on Monday.

Despite the willingness of investors to speculate on Hatten Land's digital future with incomplete information, the company should not be complacent about its disclosure obligations as a Singapore-listed company.

It seems odd that a company with the confidence to contemplate a metaverse is unable to publish its financial statements on time, Malaysia's movement control orders notwithstanding.

On Aug 25, Hatten Land said it had been informed that SGX has no objection to its application for an extension of time to release its financial results for FY2021 and hold its AGM.

The company said its results will be out on or before Oct 28, while its AGM will be held on or before Dec 30.

Hatten Land should perhaps remember that the metaverse is meant to reflect the real world - it cannot hope to thrive in the former without also delivering value in the latter.