Hatten Land Recalibrates Strategy Amidst Challenges

For entrepreneur Dato' Colin Tan, developing a real estate asset is akin to raising a child - it's a journey that is exhilarating, rewarding and challenging all at once. "Every property project is like a child that needs to be nurtured and cared for," said the Executive Chairman and Managing Director of SGX-listed Hatten Land. "We use the best of our abilities and resources to develop and optimise the project's potential for the benefit of all stakeholders, while at the same time, overcoming obstacles and challenges that arise from day to day." Even the name reflects this ethos. "The name 'Hatten' is derived from the Japanese word for growth and development," he added. Singaporean-born Tan graduated from the University of Dublin with a Bachelor of Science in Finance in 2009. Back in 2005, he and his brother, Edwin, got a headstart in the family's real estate business under the Hatten Group through their involvement in the revival of an abandoned shopping mall project in the state of Melaka. The project was successfully completed and it is now Melaka's largest shopping mall. Over the past decade, Hatten Group has morphed into a leading property player in Melaka, and its core businesses range from real estate development and investment to hospitality, retail and education. As Hatten Group's property assets became larger and more diversified, the Tan brothers decided to spin off their real estate development business into a separate entity, through a reverse takeover of SGX-listed VGO Corporation Ltd in 2017. It was renamed Hatten Land Ltd. "Although Hatten Group has gained good traction with a growing track record of projects in Melaka and the rest of Malaysia, our brand profile is not widely recognised across Southeast Asia," Tan noted. "In light of our regional ambitions, we spun off Hatten Land and listed it on SGX Catalist to build a much larger, international profile. This would allow us to enhance our branding and secure more opportunities for M&A opportunities." Headquartered in Melaka, Hatten Land has established itself as one of the premier developers in the historical city, which is located on Peninsular Malaysia's west coast. It specialises in integrated residential, hotel and commercial developments. With the Right of First Refusal and call options to more than 20 land parcels and development rights in high-growth sites throughout Malaysia, it is able to review if a specific land bank is suitable for development before releasing it to other developers. This gives it near-unrivalled and priority access to many prime plots in the country. Hatten Land has also won more than 50 awards and accolades for its quality developments, innovative designs and avant-garde architectural concepts. Its track record as a visionary developer includes constructing Melaka's tallest building and largest shopping mall. Hatten Land's current development portfolio comprises five integrated mixed-use development projects and one retail mall in Melaka. "One of the high points in my corporate journey has been playing a part in shaping Melaka's tourism landscape, creating more economic opportunities, as well as developing perennial and iconic landmarks in the state," Tan noted.Technological Edge Looking ahead, Hatten Land's vision is to transform itself into one of Southeast Asia's leading real estate developers with a strong technological edge. Over the next three to five years, two of its key growth drivers will be property technology, or proptech, as well as wellness and healthcare property assets. "Real estate is one of the oldest industries in the world, and worth trillions of dollars in every economy, but the technology related to property is still in a nascent growth stage," Tan said. "Proptech is starting to make its mark in the areas of property development and investment, the occupier market, as well as estate agencies. That includes online listings, virtual reality, machine learning, big data and crowd-sourcing." For Hatten Land, its proptech strategy revolves around its recent acquisition of a 20% stake in blockchain company ECXX Global Pte Ltd. ECXX has obtained approval from the Monetary Authority of Singapore (MAS) for admission to the Fintech Sandbox Express under a Recognised Market Operator (RMO) regime. With this approval, ECXX plans to launch a blockchain-based securities exchange platform, ecxx.co, which offers various asset-backed digital securities - including real estate, private equity, venture capital and investment funds - to institutional and accredited non-individual investors. Hatten Land will work with ECXX to explore opportunities to monetise its property assets through this platform, creating asset-based securitisation tokens that can be regulated and traded. Hatten Land will also focus on incubating up-and-coming tech companies, so as to create innovative applications and solutions that can be adopted in tourism, retail and hospitality. It has also developed MAI, a mobile phone super app that allows users to earn and redeem points, as well as make payments, in Melaka. The next priority on Tan's list is creating a new stream of recurring revenue for Hatten Land by pursuing healthcare and wellness property assets. It is currently constructing Satori, a mixed development project integrating hospitality, retail, residential with health, wellness and beauty services, located in the heart of Melaka. "Using Satori as a launch pad, we're looking to partner well-known medical institutions to offer memberships that can provide patients access to comprehensive and quality services," Tan said. "Designed around patient needs and using new healthcare technology solutions, these memberships aim to provide primary care, preventative, as well as health maintenance services for members." And while future growth avenues look promising, challenges abound. COVID-19, in particular, has created major hurdles. "As a tourism state, the business impact in Melaka and on the Hatten Land group of companies has been distinct, with a significant reduction in international and domestic tourist arrivals," Tan said. "At the same time, potential investors are expected to conserve cash to ride out this prolonged period of uncertainty, rather than committing to big-ticket items such as property."Fortifying Resiliency Against this backdrop of weak consumer sentiment and a challenging business environment, Hatten Land reported a net loss of RM231.0 million for the full year ended 30 June 2020, notwithstanding a profitable first six months, mainly due to impairments, a write down and adoption of a new accounting policy. It has embarked on a restructuring exercise for its two debt-ridden subsidiaries, MDSA Resources Sdn Bhd and MDSA Ventures Sdn Bhd. This is aimed at strengthening their balance sheets and re-aligning their legacy contractual obligations, so as to achieve a more sustainable capital structure, in line with the current business climate. In August 2020 , Hatten Land also unveiled a new strategic investor - Singapore-based hospitality and investment company Tayrona Capital Pte Ltd - for its Harbour City project in Melaka. This is expected to generate gross proceeds of US$60 million for once the transaction is completed. "Our first priority is to unlock the value of our quality property assets," Tan said. "In the current environment, we have also undertaken various initiatives to preserve cash, bolster our balance sheet, and boost business resiliency." He pointed to Hatten Land's various cost-containment measures, which include salary adjustments and reduction of non-essential expenses to balance its near-term priorities. "We will continue to adopt a prudent approach to capitalise on new opportunities to enhance our core business when market conditions normalise," he noted. Despite the challenges, Tan remains focused on Hatten Land's responsibilities to its various stakeholders. "That's our main driving force - it spurs us to forge ahead and make things right," he added. Understandably, many issues keep the 37-year-old up till the wee hours. "I'm always thinking about how to create growth initiatives and deliver value propositions, identify and manage business risks, engage and retain the best talent, as well as be a good and responsible leader." Ultimately, Tan wants to inspire his staff and team mates to become their best selves and realise their fullest potential. "I always encourage them to maintain a positive mindset, because there will constantly be challenges and failures in life," he added. "But there's always a light at the end of the tunnel, so we must persevere and move forward." Hatten Land Ltd Hatten Land is one of the leading property developers in Malaysia, specialising in integrated residential, hotel and commercial developments. Headquartered in Melaka, it is the property development arm of the conglomerate Hatten Group, which is a leading brand in Malaysia with core businesses in property development, property investment, hospitality, retail and education. Hatten Land began trading on the Catalist board of SGX on 28 February 2017 after completing its reverse takeover (RTO) of VGO Corporation. The company website is: hattenland.listedcompany.com Click here for the company's StockFacts page. For the three months ended 30 September 2020 financial results, click here. About kopi-C: the Company brew Text: Jennifer Tan-StanisicPhoto: Company filekopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations. For previous editions of kopi-C: the Company brew, please click here. For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to jennifer.t@sgx.com.