KUALA LUMPUR (Jan 18): Spring Gallery Bhd is making its maiden foray into the property development market through a joint venture (JV) with Hasil Senudong Sdn Bhd to develop a residential project in Kledang Utara, Perak.

The proposed development will feature two blocks of medium-end apartments on land measuring 3.3ha, with an estimated gross development value of RM161.2 million.

"The development plan of the project is still at its preliminary stage and has yet to be finalised," said Spring Gallery in a filing with Bursa Malaysia today.

Spring Gallery said it intends to venture into the property development business to provide another stream of revenue source to complement its existing construction business.

The group, via its wholly-owned subsidiary Million Rich Development Sdn Bhd, has entered into a JV agreement with Hasil Senudong for the proposed project. Spring Gallery will control 60% of the JV, while Hasil Senudong will hold the remaining 40%.

Under the JV agreement, Hasil Senudong will contribute the development land, as well as apply and obtain the approval for the conversion of the land within six months from the purpose of sport and recreation to residential building. Spring Gallery, meanwhile, will bear the entire cost of developing the project, which is estimated at RM106.35 million.

Spring Gallery has also agreed to pay a sum of RM17.5 million to Hasil Senudong as performance bond under the JV agreement.

"Barring any unforeseen circumstances, the project will commence by January 2018 and complete within two years," it said.

"The board believes that the project would contribute positively to the future earnings of Spring Gallery Group and improve its financial position via additional revenue and earnings contribution from the project," it added.

Spring Gallery shares closed down 0.5 sen or 0.82% at 60.5 sen today, bringing a market capitalisation of RM86.35 million. — theedgemarkets.com

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