KUALA LUMPUR (June 7): Tiong Nam Logistics Holdings Bhd is planning to purchase a tract of freehold land in Johor Baru for RM40.22 million to increase the group’s existing landbank in strategic locations to enhance its future revenue and profit.
The land in the Eastern Gateway of Iskandar Malaysia, near the booming Pasir Gudang Industrial Hub and Tanjung Langsat Industrial Park, is also 5.5km from Senai-Desaru Highway, one of Johor’s major expressways, said Tiong Nam in a Bursa Malaysia filing.
Tiong Nam is buying the tract via its wholly-owned unit Medini Heritage Sdn Bhd, which it said intends to develop the land within six months after the relevant proposals are obtained, and upon completion of the planning and development details. The development is expected to be completed in the two years after that.
“Given the land’s strategic location as mentioned, the management is confident that the development to be carried out on the land will be well received by the public,” said Tiong Nam.
The payment of the purchase price and the development cost of the land will be funded via internally generated funds and/or bank borrowings, said Tiong Nam, though it did not reveal the development cost.
Tiong Nam said the group’s gearing ratio is expected to rise 4% following the land buy. As at March 31, 2017, the group’s latest audited gearing ratio was at 109%.
Tiong Nam shares closed unchanged at RM1 yesterday, with a market capitalisation of RM451.21 million. Over the past 12 months, the counter has fallen near 43%.
This article first appeared in The Edge Financial Daily, on June 7, 2018.