Hatten Land, which has thus far focused on property-related businesses, has completed what it called a &ldquo strategic review&rdquo of its business and will diversify its operations into the blockchain sector and the digital economy. 

 

In a release on Dec 1, Hatten Land said it has substantial hospitality and commercial property businesses and assets in Melaka that are affected by the COVID-19 pandemic, with travel and movement restrictions affecting domestic and international tourism.

 

As such, the review was to prepare for the resumption of commercial activity with the relaxation of travel and movement restrictions as well as the progressive efforts to re-purpose its malls. 

 

&ldquo These efforts aim to not only invigorate retail activities and enhance retail experiences in our malls by creating an omni-channel or &ldquo phygital&rdquo retail platform with e-commerce and our real estate assets, but also open up new opportunities such as digital assets and digital economy activities,&rdquo the company writes.

 

In addition, it aims to advance our sustainability efforts via new renewable energy initiatives, among others.

 

Hatten Land has outlined four strategic initiatives that it plans to take. 

Firstly, the malls will be re-purposed to include &lsquo green&rsquo cryptocurrency mining (&ldquo crypto mining&rdquo ) activities, and they will set up specialised crypto exchanges to list and trade &lsquo green&rsquo and clean tokens and other digital assets and to provide related custody services. 

It also aims to create a &lsquo metaverse&rsquo world, commencing with a digital twin of Melaka and building up an eco-system to create new digital assets including non-fungible tokens (&ldquo NFTs&rdquo ) and tokens. 

 

To power this effort, Hatten Land&rsquo s malls will also implement renewable initiatives commencing with solar panels to be installed on the roofs of the malls.

 

This will allow it to lower energy costs, enable &lsquo green&rsquo crypto mining activities, and advance the company&rsquo s sustainability efforts

 

Finally, it aims to set up what it calls &ldquo phygital&rdquo malls to prepare for the post-pandemic economic activities resumption, and plans to improve the tenant mix and related activity of its malls in Melaka.

 

These physical-digital malls will combine omnichannel retail concepts with brick-and-mortar property assets. 

 

These will be supported by &ldquo integrated supply chain solutions, customer service, training programs for retailers, live-streaming studios, among others.&rdquo  

The Phygital mall, together with its e-commerce and payment platform, is expected to be launched in 2HFY2022 through a dedicated mobile &lsquo app&rsquo that will be accessible 24/7 for e-commerce activities. 

 

Hatten revealed it will be able to accommodate many more merchants compared to a traditional brick-and-mortar mall.

Customers can opt to visit the physical stores to participate in events and sales promotions, or physically inspect a product before making a purchase online, or to pick up the items instead of having them delivered.

 

With these four initiatives, &ldquo The directors and management [of Hatten Land] believe that these strategies will contribute to a broader recovery of Hatten Land starting in the financial year ending 30 June 2022 (&ldquo FY2022&rdquo ) following losses in FY2020 and FY2021 which were attributed largely to the impact of the pandemic.&rdquo

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.