by SHAFIQQUL ALIFF / pic by TMR FILE
LIM Seong Hai Capital Bhd (LSH Capital) has announced a series of corporate proposals as part of its upstream integration growth into property development and to boost its rapidly developing construction company.
The corporate proposals, with a combined acquisition value of RM157.6 million, includes the acquisition of a 100% stake in Astana Setia Sdn Bhd for RM95 million, an assets exchange agreement and debt settlement cum share subscription agreement with LSH Ventures Sdn Bhd for a total value of RM62 million
The purchase of Astana Setia is to be fully satisfied via the issuance of 211 million new LSH Capital shares at 45 sen a share, which presents a premium of 7.14% to 9.2% over the closing market price on March 25, 2022, and the volume-weighted average price of six months, the group stated in a release yesterday.
In a filing to Bursa Malaysia yesterday, LSH Capital stated that the corporate exercise will see it will have an extended secured construction orderbook worth RM1.1 billion, with an overall outstanding orderbook of RM782 million, as well as a property development project worth RM1.59 billion in gross development value (GDV) that will provide earnings visibility until 2026.
Astana Setia has an existing RM395.9 million GDV for its Residensi Laman Segar Hijau (LSH Segar) development project in Taman Segar, Cheras.
Astana Setia’s flagship LSH Segar project has secured 100% uptake under the Rumawip housing scheme, and 70% uptake among open units. Astana Setia also has an external construction orderbook of RM390.81 million, of which RM146.82 million is still outstanding.
LSH Capital is involved in construction and property development projects amounting to RM2.7 billion via the BEST Framework collaboration as it will enable the group to earn a certain portion in fees for various value creation efforts.
The group stated that the proposed transaction with LSH Ventures involves the acquisition of four plots of land with structures on-site in desirable locations around Kuala Lumpur, Kajang and Johor Baru for RM8.14 million.
In addition, LSH Capital will settle the RM54 million amount owing to LSH Venture’s directors.
LSH Capital will control 99% of LSH Ventures and 93.75% of Astana Setia and Euro Saga Sdn Bhd upon completion, which will launch the future flagship project “Lake Side Homes” on a 4.8ha plot of land in Sungai Besi with an anticipated GDV of RM1.19 billion.
LSH Capital will also seek shareholder permission to expand its core industries to include property and construction-related sectors since these new integrated upstream businesses are expected to generate more than 25% of the group’s net profit in the future, it stated.
LSH Capital non-executive chairman Tan Sri Lim Keng Cheng said LSH Capital has increased its expansion efforts since its LEAP Market listing in July 2021, rewarding shareholders with outstanding earnings performance in the most recent financial year ended Sept 30, 2021 (FY2021), and dividends of RM2.34 million, meeting the group’s 30% dividend target.
“The latest exercise puts the group on the right track towards strengthening its presence in the local construction and property development sectors and to become a billion-ringgit company in the long run,” he said.
He added that the expansion of its property development venture also allows it to better synergise the operations currently undertaken by Lim Seong Hai Lighting Sdn Bhd and Knight Auto Sdn Bhd, subsidiaries of LSH Capital, with a continuous emphasis on the BEST Framework, which was introduced in 2021 to improve its project execution and business proposition.
“This will further expand the construction business together with the inclusion of property development and property investment, will allow the group to achieve significant involvement in the supply chains in the construction industry.
“This is in line with the BEST Framework adopted by LSH Capital with the aim to transform the core foundation of the construction industry.”