Kimlun buys 47 vacant plots and 30 houses in Shah Alam from Melati Ehsan for RM68m

KUALA LUMPUR (Jan 26): Kimlun Corp Bhd is buying 47 vacant detached lots and 30 double-storey detached houses in Shah Alam from Melati Ehsan Holdings Bhd for RM68.4 million.

In a filing with Bursa Malaysia, Kimlun said its wholly-owned subsidiary Kimlun Land Sdn Bhd is buying the properties from Melati Ehsan’s wholly-owned unit Bayu Melati Sdn Bhd.

Kimlun said the proposed acquisition will enable it to raise its landbank in a strategic location in order to enhance its future revenue and earnings.

The properties were issued with 99-year leasehold titles expiring on Jan 26 or 27, 2103 while the net book value of the lots and houses were RM22.4 million and RM43.4 million, respectively as at Nov 30, 2017.

Kimlun Land, as the sole developer, plans to carry out some enhancements on the 30 houses, and build bungalow units on the 47 vacant lots after the completion of the acquisition.

Kimlun said that as the development potential has yet to be detailed or finalised, the total development revenue and cost, expected commencement and completion date or expected profits to be derived cannot be readily ascertained.

However, given the strategic location of the properties, the management is confident that the housing development to be carried out on the properties would be well received by the public.

The purchase consideration is expected to be satisfied by internally generated funds and bank borrowings.

Kimlun added that for illustrative purposes, based on the group’s audited total equity as at Dec 31, 2016 and the assumption that RM41 million, about 60% of the total purchase consideration, would be financed through external borrowings, its gearing ratio is expected to rise by 0.08 times.

Melati Ehsan, in a separate filing, said the disposal will help to unlock capital resources from being tied up as long-term assets and realise the value of the property at a fair market value while enhancing its liquidity and strengthening its financial position.

The estimated gain from proposed disposal is about RM1.15 million, it said, adding that the proceeds would be used as working capital.

Barring unforeseen circumstances, the proposed disposal is expected to be completed not later than the end of first quarter of 2020.

Kimlun's share price fell one sen or 0.44% to RM2.25 for a market capitalisation of RM721.4 million, while Melati Ehsan slipped 1.5 sen or 1.94% to 76 sen, valuing the company at RM90.7 million. — theedgemarkets.com

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