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Rebranded GYP eyes property for growth
PHOTOGRAPHS of GYP Properties' New Zealand properties line the walls of the developer's mainly monochromatic main office in Toa Payoh North.
But on a display shelf, a reminder of its history - a copy of the final print edition of the Yellow Pages directory.
The company, known as Global Yellow Pages until last year, started diversifying in 2013, away from its decades-long core business of publishing phone books and amassed land and property in New Zealand.
Its current mandate is to deliver on its 10 to 15 years of development pipeline spanning 30 ha in all, comprising more than 1,500 residences, about 30,000 sq m of retail space, two office blocks and a hotel.
The pivot from phone books came after the company found itself upended by search engines such as Google and as the team came to the conclusion that "it's always almost impossible to disrupt yourself", as chief executive Stanley Tan had said in an interview.
Revenue from its directories business fell from S$61.3 million in its fiscal 2005 to S$16.3 million in its fiscal 2014.
Those with longer memories may also recall Mr Tan and current director Pang Yoke Min's attempt, eventually withdrawn, to oust several directors in 2007.
The two - who had become directors after their combined interest had hit 27 per cent of the company - reportedly felt the firm was not performing up to its full potential.
Though that attempt was eventually withdrawn, the then-chief executive resigned anyway, along with some other directors.
After Mr Tan became executive chairman in 2008 and chairman and acting chief executive officer in 2009, he said he tried to keep the company relevant such as by providing multi-platform solutions for small and medium enterprises (SMEs).
Mr Tan said: "We obviously tried to change by trying to reposition ourselves in the new medium for our existing business, but we felt that we again were not able to transform faster. By 2013, we decided... it is wiser for us to find a new business rather than to change our business operations in a new way."
The company began looking at food and property, both "very traditional businesses where technology is an enabler not a disruptor."
For example, in 2013, the company invested in Yamada Green Resources, a supplier of self-cultivated edible fungi.
But not all the food ventures worked out. At the end of 2013, GYP had attempted to buy the Australian chain Gloria Jean's Coffees, but it missed the sunset date of the acquisition.
Meanwhile, the team successfully entered several property deals in New Zealand, including the investment announced in 2014 in Pakuranga Plaza shopping mall. GYP decided to focus on property to achieve "meaningful scale".
It also bought a 3.84 ha freehold land in Queenstown in 2016, now known as the Remarkables Residences project, and 22 hectares of land in Papakura in Auckland, now known as the Bellfield Estate development.
So far, these have been funded by internal resources and bank financing, as well as by tapping the market twice.
In its portfolio, it also counts the home for its headquarters, Braddell House - once known as the Yellow Pages Building until a recent rebranding - which it partly rents out.
As the real estate segment became the biggest contributor to group revenue and total assets from FY2016, the company also divested other non-core businesses, including food.
This year, it sold off for S$4.69 million a company that owns the intellectual property and master franchise, and operates the supply chain business for the Australian ice cream chain Wendy's Milk Bar, acquired a few years back. It also no longer has any shares in Yamada.
From 2018, it no longer operates the Yellow Pages print and digital directories, and instead licenses the brand to an associate company, Yellow Pages. Asked why it took until 2017 to announce that it would make that move, Mr Tan said: "We have a lot of employees, and we want to be a responsible employer. So as long as the business could afford us supporting those employees, we continued."
In its latest annual report, the company noted over S$1 million of termination benefits from employees made redundant.
In June 2017, GYP launched its first phase (out of six) of 56 units at the 225-unit residential project Remarkables Residences. They have sold or committed 55 units with one unit not yet sold, at a median price of NZ$850,000 (S$782,000) to NZ$900,000.
GYP has just soft-launched Phase 1 of the 500-unit Bellfield Estate in Auckland and plans to launch the second phase of Remarkables Residences hopefully by the last quarter of the year.
In the next phase for Remarkables Residences, Mr Tan is considering using pre-build or modular manufacturing solutions as he believes they can deliver better specifications and quality.
He said: "We can make sure that the material is more energy-efficient where it's appropriate. That sort of factory environment allows us to source more widely, but if we are doing traditional construction, we still consider that but we are more limited to local supply."
Mr Tan said that the company constantly watches for opportunities in Singapore and Australia as well, though it's been particularly active in New Zealand.
He said: "As a rough guide with a hundred million dollars worth of equity, there's very limited opportunity for us in Singapore or Australia size-wise, whereas in New Zealand, we managed to acquire about 30 hectares of land for development."
Mr Tan said that currently, strong residential demand is coming from a housing shortage in Auckland and Queenstown and migration to the country.
GYP's residential projects are targeted at the mid-price range of the market. Because most of their projects' purchasers and investors are local, Mr Tan does not believe that restrictions on foreigners purchasing residential properties in New Zealand are likely to affect the company's strategy materially.
His confidence in New Zealand comes from the fact that he invested in property in New Zealand for decades privately. Several others on the board like non-executive chairman Mah Bow Tan, the former cabinet minister, and Mr Pang have invested in New Zealand property as well. (see amendment)
The Business Times (BT) pointed out that property is often an avenue for ailing companies in Singapore to turn to when seeking a new core business. Firms like GSH Corporation, Thakral Corporation and IPC Corporation have made such a move.
Mr Tan said: "We didn't go into property because we think it's safe, we didn't go into property because it's the obvious thing to do. We went into property because we believe that we could do well, and that we understand it."
In its fiscal year 2018, GYP's profit attributable to equity holders from continuing operations was at S$3.5 million, reversing the previous year's loss of S$1 million.
GYP will only begin recognising revenue from the first phase of Remarkable Residences from FY2020.
This year, the mainboard-listed company was released from the Singapore Exchange (SGX)'s financial-criteria watch-list.
It has until June 4, 2020 to meet SGX's minimum trading price (MTP) criteria for mainboard companies of having a volume-weighted average price of over S$0.20 per share and an average daily market capitalisation of at least S$40 million over the last six months, although BT reported on Friday that SGX RegCo plans to seek public feedback on a proposal to scrap the MTP criteria.
GYP closed on Friday at S$0.135.
As per its 2018 annual report, the company counts Sam Goi, Mr Mah, Mr Tan and his daughter Kathlyn Tan and independent director of Pacific Radiance Yong Yin Min as substantial shareholders.
Amendment note: A previous version of the story said that Mah Bow Tan is the executive chairman; he is in fact non-executive chairman. The article has been amended to reflect this change.