Chuan Huat Resources Bhd is acquiring two lots of industrial land from Lim Kim Chuan & Sons Holdings Sdn Bhd for RM12 million with the aim of expanding its manufacturing facilities for industrialised building system (IBS) products.
In an exchange filing on Tuesday, the construction, building hardware and steel industries group noted it is looking to acquire the plots of vacant land measuring 8,903 sqm and 8,423 sq m respectively, via its indirect wholly owned unit CH Rebar Sdn Bhd.
Located in Klang, Selangor, with leaseholds expiring in 2068, Chuan Huat said the land will be developed to build an IBS-production facility with an estimated construction cost of RM8 million to meet anticipated demand in line with government-led initiatives.
“The demand for IBS products is anticipated to increase in the local construction industry,” it said.
“The Malaysian government through relevant agencies has been promoting the usage of IBS to increase productivity and quality at construction sites through various promotional programmes, training and incentives.”
Chuan Huat added that all government agencies have been directed to increase IBS contents in their building developments, while the construction industry has reportedly been advised to adopt the IBS in the next three years before it is made mandatory for all projects.
Chuan Huat believes the sites are also anticipated to appreciate in value further due to its strategic location in Klang and accessibility to major cities.
The development of the plant will commence after the proposed acquisition is finalised — expected by the third quarter of next year — and is due to be completed within one year of securing the relevant approvals.
The RM12 million price tag for the land plots took into account a 0.83% discount of its market value of RM12.1 million as of July 10 this year.
The purchase is to be funded through a combination of internally generated funds and not over 50% of bank borrowings.