GBH plans RM143m property purchase

KUALA LUMPUR (Dec 21): Ceramic products company Goh Ban Huat Bhd (GBH) is planning to buy several properties in Pontian, Johor, from three companies controlled by the family of its controlling shareholders, for RM143 million.

It is also seeking to diversify its business into construction and property development, it announced in a Bursa Malaysia filing yesterday.

The properties it is buying are 29 units of unsold 1.5-storey semi-detached factories — with a collective built-up area of 340,542 sq ft — 15 parcels of vacant industrial land, a vacant commercial plot, and a vacant hostel land that measures 45.52 acres (18.4ha) in all.

GBH said it is undertaking the purchases via its wholly-owned unit Paragon Bizhub Sdn Bhd, who inked three conditional sale and purchase agreements (SPA) with Pekan Nenas Industries Sdn Bhd (PNISB), Pekan Nenas Development Sdn Bhd (PNDSB) and Jayaplus Development Sdn Bhd (JDSB), for the acquisitions.

GBH chairman Datuk Tan Eng Boon holds a 52.5% stake in PNISB, 78.71% in PNDSB, and 66.68% in JDSB. Eng Boon is the father of GBH managing director (MD) Datuk Seri Edwin Tan and executive director Datuk Seri Godwin Tan, who both control a 70.4% indirect stake in GBH. Edwin also holds between 8.33% and 20.29% of the three vendor companies, while Godwin has an 8.33% stake in JDSB.

The vacant commercial plot, which GBH is buying from PNISB, has already obtained planning permission from the Majlis Daerah Pontian to be developed into Pekan Sentral, a mixed commercial area with a gross development value of RM126.1 million. At an estimated gross development cost of RM82 million, GBH said there would be a potential gross development profit of RM44.1 million from the project.

The development will comprise 158 units of two- and three-storey shopoffices, a hotel, and commercial development including a restaurant and a petrol station. The project should start in the first quarter of 2018 and take about four years to complete, said GBH.

The proposals came following a review and evaluation of GBH’s operations after the emergence of property developer Paragon Adventure Sdn Bhd — the private vehicle of Edwin and Godwin — as its controlling shareholder of GBH on Sept 27, after tycoon Tan Sri Robert Tan Hua Choon sold his 51% stake in GBH to Paragon Adventure for RM145.71 million.

Yesterday, GBH said the proposals represent its strategic plan to expand and diversify into other viable revenue-generating businesses as part of a longer-term plan to move the group forward, rather than relying on its existing core business of trading of ceramic wares and tablewares, which has been seeing limited revenue growth in past financial years.

The proposed buys would also expand its existing land bank to include lands in Johor, which are strategically located at the western border of the Iskandar Malaysia region.

It expects the proposed acquisitions to provide the group with another source of revenue stream to enlarge its earnings base.

GBH also said it plans to leverage on the competencies and experiences of Edwin and Godwin, who have been involved in the construction and property development businesses for over 10 years.

The proposals are expected to be completed by the first quarter of 2018. Its shares closed unchanged at RM1.59 yesterday, with a market capitalisation of RM279.98 million.

This article first appeared in The Edge Financial Daily, on Dec 21, 2017.

For more stories, download EdgeProp.my pullout here for free.