Marine Project Proposal - Houseboat

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Project Proposal

2011

Mohd Ariffin Abdullah

Investment in Houseboat

Head Office : No 57&59, Jalan TIAJ 2/10. Taman Industri Alam Jaya, 43200, Bandar Puncak Alam, Selangor. Tel 03-6038 9786 Fax 03-6038 8786

Main Factory : PT 1590 Jalan Kampong Tok Muda, Batu 12 Kampong Tok Muda, 42200 Kapar, Klang, Selangor. Fax 03-3250 0539 Sarawak Branch : Lot 1191(T1) 1192(T2), Jalan Bako, Kawasan Industri Mara (KIM), Demak Laut Industrial Estate, Muara Tebas, 93050, Kuching, Sarawak.

Email : [email protected]

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Introduction – The Manufacturer

TG Advance Composite Technology Sdn Bhd is a newly formed company specialising in manufacturing

fibre composite based marine products. Our production utilises one of the latest advancement in fibre

composite manufacturing industry i.e. advance vacuum infusion process. The machine for this process is

developed in-house by our technical director and his team hence lowering cost and having better control

over future development and quality of our products.

Although this is a new company, the team members have extensive experience in their own field with our technical director leading the pack at 21 years of service in the fibre composite industry. The other team members have working experience with MNCs even with working experience abroad. The team members combined create a very strong team driving the organisation and the industry forward; which suits our slogan “Moving Forward With Advance Composite Technology”.

The company is also engaging in extensive R&D program in collaboration with UTM, Skudai. We are in the

midst of applying MOSTI research grant to strengthen our production and manufacturing capability. With

our commitment in R&D, it is expected that the quality of our products will be upgraded and our

manufacturing costs lowered making our unit product price very competitive in the market.

At present, the company operated 2 factories in Klang and Kuching. The headquarters is located at Taman

Industri Alam Jaya, Bandar Puncak Alam, Selangor. We are in the midst of preparation for an exposition in

Kuching, Sarawak this December. The expo is titled “Ekspo Usahawan Petani dan Nelayan” (Expo for

Farm and Fishery Entrepreneur). This project proposal will also be showcased at the expo.

Investment in Houseboat




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Overview

The introduction of houseboats as moving and floating accomodation in Malaysia started way back in the late 1970s. It was introduced by the Vietnamese Boat People when they had to flee their country during those war turmoil times. They literally lived in these boats floating to a safe haven and Malaysia was one of their destinations.

Since then the idea caught on. The notion of living in a boat as a means of leisure getaway seems very original and refreshing. This was already a practice in the USA since the early 1970s and much earlier than that in the UK. Our neighbouring country, Thailand also have boathouses predominantly made of bamboos and the design is more of a floating raft with a cabin.

The commercialisation of houseboats in Malaysia started with the opening of Kenyir Lake as a tourism spot in mid 1980s.

Today, the tourism business in Kenyir Lake and many other lakes in Malaysia have grown to become a world recognised site. The local industry entrepreneurs have increase in number and size.

However, the design of the houseboats remains as they were in the early days. These designs although practical and with a rustic feel, is not cost effective in terms of fuel consumption and maintenance.

There are issues on health and safety with the current houseboats. The health and safety issues comes from the design, material and facilities itself. There have been reports of these wooded houseboats burnt down and even sunk whilst people were still onboard.

On the health and environment aspect, there is the inadequate availability of proper water and rubbish sewerage facilities. Most of the sewage are channelled straight to the lake or rivers. The impact of these practices could be damaging to the environment.




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Introduction - Project Proposal It is high time that the houseboat design is upgraded. This project proposal details out one of the many

plans that could be taken to upgrade these houseboats and thus boost the local tourism industry in this

sector. Thus we are inviting willing potential investors to join forces with us to turn this project a reality.

TG Advance Composite Technology Sdn Bhd has proposed a new design to be introduced in Malaysia.

This new design is not meant to replace the existing traditional houseboats but more as an addition to the

availability and choices of houseboats for rental or personal use in Malaysia. This new user customisable

design would also be produced wholely in Malaysia using the latest in composite fibre technology.

This project proposal details out some investment plans with expected level of ROI and income that an

investor would anticipate in this industry. With the forecasted financial performance in this industry, the

potential investors would be better informed in their decision making process.

Project Goals and Objectives The goal of this project is to introduce to the market the latest in houseboat design and material usage. The

new design and material concept aims at reducing the health, safety and environmental issues of the current

design. It also targets at lowering maintenance cost and reducing the cost of ownership of these houseboats.

The project objectives are as follows:-

1. To introduce to the local industry a world class houseboat in terms of design, specification and

facilities

2. To boost the local tourism industry by improving the facilities being offered thus attracting more

tourist from local and abroad

3. To elevate the local boat building industry to the next level with international marine standards

specification

4. To provide better investment opportunities to local industry entrepreneurs or investors by offering

various investment plans

5. To provide better job and business opportunites to the local people




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Project Proposal

The project proposal is to invest in a 30-footer in-house designed houseboat as per the specification in the

attached BQ. This houseboat is customisable to meet the demand and purpose of the investor. We are

inviting potential and interested parties to come and meet us to discuss the various invesment and business

opportunities available.

TG Advance Composite Technology Sdn Bhd will develop, manufacture and install all finishings at our

factory in Kapar, Klang. We would also be doing the product testing for full functionality, physical

properties testing comforming to international standards, delivery and site testing and commisioning. We

would also assist in obtaining all the relevant documentation, licences and permits.

This development from start to finish would take approximately 3 months to be fully operational. The full

implementation plan could be seen in the Gantt Chart attachment. Potential investors and any interested

party could come and visit our office and factories at any point in time with some short notice.

The proposed specification of the houseboat is as follows :-

1. 30-foot (30’ x 9’) multi-hulled double deck boat fully fibre composite material

2. House cabin made of fibre composite materials

3. Outboard petrol engine with 85hp

4. Onboard petrol gen-set for electricity supply

5. Captain console unit and console area

6. Enclosed dining and kitchen area exclusively

7. Bedroom with furniture and fittings

8. Bathroom and toilet facilities including internal water tank and black tank for sewerage

9. Other facilities and features detailed out in the product standard BQ




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Project Proposal - Location

There are various tourism spots in Malaysia that we could target to introduce this product and services. A

full study would be undertaken from each tourist destination before any plans are put in place. Our team

would do the groundwork in obtaining the site research data and information to ascertain the viability of

such sites. A new financial forecast would be made should the existing data defers from our earlier

estimated figures.

The selection of the proposed project sites are as follows:-

Tasik Kenyir, Terengganu

Tasik Chini, Pahang

Tasik Pedu, Kedah

Tasik Banding, Perak

Tasik Dayang Bunting

Tasik Pergau, Kelantan




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Tioman Island, Johor

Pangkor Island, Perak

Redang Island, Terengganu

Perhentian Island, Terengganu

Langkawi Island, Kedah

Sipadan Island, Sabah




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Investment Plan The potential buyers or investors could utilise the houseboat as follows:- 1. Purchase for personal use at any

designated location

2. Purchase to commercially run own floating chalet business

3. Purchase to sub-lease the houseboat to any chalet/resort operator

4. Purchase to let our dedicated team run the chalet on behalf

The investment plan that we are proposing covers mainly about Option 4 from the above list. Our 5-year

Income Statement forecast however covers the typical level of investment and its returns including

investment costs for this industry. Potential investors could use this forecast to make a better-informed

decision on their investment levels. These forecasts are prepared by our financial expert with 15 years of

experience in the field. For further enquiries on the basis of the forecast plans or any part of it including the

investment plans on offer, please refer to our finance department.

Basically, we are offering 2 levels of investment scheme. The investment schemes are as follows:-

1. Return Plan 150 (RP150)

2. Return Plan 90 (RP90)

Return Plan 150

1. The investment level of RM150k for the full price of the houseboat 2. The investor owns the houseboat outright 3. Our company runs the houseboat on behalf of the investor 4. Choice of location from top tourist attraction lakes, rivers and islands in

Malaysia 5. The investor would have 14 days per annum of free personal stay in the

houseboat or its equivalent 6. Development time is around 3 months before the houseboat is ready for

operation. 7. All the operating needs such as licensing, ticketing, staffing, site office and

facilities, maintenance, sales and marketing are handled by our company 8. The profit share is 70% to the investor 9. Profit is calculated from sales after deducting direct costs and operating

costs. The calculation can be seen clearly from the financial forecast statement.

10. The full information would be detailed out in the draft rental operating agreement

Summary RP150

Invest RM150k

Owns outright

14 days annual free

stay

Operator runs 100%

Enjoys quarterly

income

Profit share 70%




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Return Plan 90

1. The investment level of RM90k for 60% of the price of the houseboat.The

remainder 40% of the cost is financed by our company 2. The investor and our company co-own the houseboat. 3. Our company runs the houseboat on behalf of the investor 4. Choice of location from top tourist attraction lakes, rivers and islands in

Malaysia 5. The investor would have 10 days per annum of free personal stay in the

houseboat or its equivalent 6. Development time is around 3 months before the houseboat is ready for

operation. 7. All the operating needs such as licensing, ticketing, staffing, site office and

facilities, maintenance, sales and marketing are handled by our company 8. The profit share is 40% to the investor 9. Profit is calculated from sales after deducting direct costs and operating

costs. The calculation can be seen clearly from the financial forecast statement.

10. The full information would be detailed out in the draft rental operating agreement

Summary RP90

Invest RM90k

Co-ownership

10 days annual free

stay

Operator runs 100%

Enjoys quarterly

income

Profit share 40%

Investment Plan - Financials

These are the recommended sales packages on offer and their proposed prices. The prices and packages are

the typical product and prices on offer currently at Kenyir Lake, Terengganu. These packages would be the

basis of the annual sales calculation in the 5 Year Financial Plan.

2D1N 260 2,080 3D2N 400 3,200 4D3N 570 4,560 Excursion (2 hours) 80 (20 pax) 1,600

The next table is the 5 Year Financial Forecast of this venture. It details out all the sales revenue, direct

costs and operating cost per annum of the proposed investment. Thus giving the financial performance in

terms of total annual returns for 5 years.

The table also calculates the return per annum for each of the investment plan above namely the Return

Plan 150 (RP150) and Return Plan 90 (RP90) respectively. The quarterly income level is expected at

RM6,200 in the first year to RM12,400 in the fifth year for RP150. For the lower RP90, the quarterly

income is expected at RM3,500 to RM7,100 per quarter from the first year to the fifth year.




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Income Statement Forecast for first 5 years of operation

Years 1 2 3 4 5 TOTAL

1. Sales RM RM RM RM RM RM

Packages

2D1N 45,760 49,920 55,910 62,620 70,134 284,344

3D2N 35,200 32,000 35,840 40,141 44,958 188,138

4D3N 27,360 36,480 40,858 45,761 51,252 201,710

Excursion 43,200 48,000 53,760 60,211 67,437 272,608

1. Total Sales 151,520 166,400 186,368 208,732 233,780 946,800

2. Direct Cost

License 4,680 5,040 5,645 6,322 7,081 28,768

Fuel 4,310 4,700 5,264 5,896 6,603 26,773

F&B 14,145 15,450 17,304 19,380 21,706 87,986

Salary 21,550 23,500 26,320 29,478 33,016 133,864

Misc 5,374 5,860 6,563 7,351 8,233 33,381

2. Total 50,059 54,550 61,096 68,428 76,639 310,771

3. Operating Cost

Sales & Marketing 8,500 8,500 9,180 10,098 11,108 47,386

Office Admin Cost 6,000 6,000 6,480 7,128 7,841 33,449

Other Costs 2,400 2,400 2,592 2,851 3,136 13,380

Staff Costs 34,000 34,000 36,720 40,392 44,431 189,543

Maintenance 3,000 3,000 3,240 3,564 3,920 16,724

Rent and Rates 12,000 12,000 12,960 14,256 15,682 66,898

3. Total 65,900 65,900 71,172 78,289 86,118 367,379

4. TOTAL COST 115,959 120,450 132,268 146,717 162,757 678,151

5. PROFIT/LOSS 35,561 45,950 54,100 62,015 71,023 268,650

0.7

6. ReturnPlan150 24,893 32,165 37,870 43,411 49,716 188,055

0.4

7. ReturnPlan90 14,224 18,380 21,640 24,806 28,409 107,460




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Financial Appraisal

The following table is the financial appraisal of this proposed investment. The first year ROI is expected a

healthy 16.6% for RP150 and 15.8% for RP90. These returns are much better than most investment plan

first year’s return available in the market. These annual returns would be expected to grow to an excellent

33.1% for RP150 and 31.6% for RP90 in year 5.

In terms of payback period on the initial investment cost, both plans have a payback period of 4.2 years or

50 months. Our product have a minimum 10-year warranty period which makes this investment very

attractive as the initial investment would continue to make money well past its payback period.

The annual growth in this industry is expected to be a stable figure around 4%. Although there would be

cases where annual growth could be much more than that, this investment model takes a moderate stance in

its figures which are easily achievable. Any growth figures more than the prudence 4% would be a bonus to

both parties.

In the table, there are also figures for “full”. This represent the total typical income from this investment

without any sharing option. In other words, it is the expected figures should an investor decides to run the

business themselves. However, the cost could be higher than the stated figures as we would enjoy

economies of scale from running a good number of houseboats per location.

Financial Appraisal

Level of investment 150,000 (ReturnPlan150 - RP150)

Level of investment 90,000 (ReturnPlan90 - RP90)

YEARS 1 2 3 4 5 TOTAL

ROI - annual

Full 23.7% 30.6% 36.1% 41.3% 47.3% 179.1%

RP150 16.6% 21.4% 25.2% 28.9% 33.1% 125.4%

RP90 15.8% 20.4% 24.0% 27.6% 31.6% 119.4%

Payback period

Full 38 months 3.2 years

RP150 50 months 4.2 years

RP90 50 months 4.2 years

Conclusion n

It can be seen that the investment in this new designed houseboat has a very good potential in Malaysia.

The return on investment is also very attractive. Please do not hesitate to contact us for further enquiries

and discussion.




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Appendices

1. Sales Table – Sales prices increment in Year 4 & Year 5

2D1N 260 2,080 2,330 2,610

3D2N 400 3,200 3.585 4,015 4D3N 570 4,560 5,100 5,720

Excursion (2 hours) 80 (20 pax) 1,600 1,790 2,000

2. Unit Sales of each packages per month and annually

Unit Sales for each package per month in 1st Year

Month 1 2 3 4 5 6 7

Sales Unit Unit Unit Unit Unit Unit Unit

Packages

2D1N 2 2 1 1 2 2 2

3D2N 0 0 2 2 1 1 1

4D3N 0 0 0 0 1 1 1

Excursion 1 1 2 2 2 3 3

Month 8 9 10 11 12 TOTAL

Sales Unit Unit Unit Unit Unit Unit

Packages

2D1N 2 2 2 2 2 22

3D2N 1 1 1 1 0 11

4D3N 1 1 0 0 1 6

Excursion 3 3 2 2 3 27

Unit Sales for each package per annum for first 5 years

Year 1 2 3 4 5 TOTAL

Sales Unit Unit Unit Unit Unit Unit

Packages

2D1N 22 24 27 27 27 127

3D2N 11 10 11 11 11 55

4D3N 6 8 9 9 9 41

Excursion 27 30 34 34 34 158

Documents

Marine Project Proposal - Houseboat