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DBE Gurney to beef up affordable housing arm

KUALA LUMPUR (July 14): DBE Gurney Resources Bhd, soon to be known as Lagenda Properties Bhd, will be significantly scaling up its affordable housing development arm by acquiring the developer of two housing projects.

In a statement today, the group said it would be buying Blossom Eastland Sdn Bhd, which is developing Bandar Baru Setia Awan Perdana (BBSAP) and Lagenda Teluk Intan (LTI).

Currently, the group has a remaining aggregate gross development value of approximately RM2.1 billion, unbilled sales of RM514 million together with a sizable landbank of around 1,200 acres to be developed.

“Bank Negara Malaysia has forecasted shortage in affordable housing is expected to reach one million units by 2020 and the maximum affordable house prices should not exceed RM282,000.

“The group will stand to benefit greatly from the acquisitions of both BBSAP and LTI as the demand for affordable housing is unmet by developers and the residential units of these two townships are priced at below RM200,000 which is in the affordable range for B40 and M40 house buyers,” it said.

The name change and acquisition of the housing projects were some of the resolutions that were passed by its shareholders at its extraordinary general meeting today.

The other proposals are:

1 The consolidation of every 25 ordinary DBE shares into one DBE share, with the theoretical adjusted reference price of the consolidated shares to be 75 sen

2 The acquisitions of Blossom Eastland, construction firm Rantau Urusan (M) Sdn Bhd and building materials trader Yik Wang Trading Sdn Bhd for RM823.3 million

3 The exemption to undertake the mandatory general offer for remaining DBE shares and warrants B not already held by Lagenda Land Sdn Bhd and its persons acting in concert

4 The amendment to DBE’s constitution to facilitate the creation and issuance of redeemable convertible preference shares, and

5 The private placement of up to 135 million new consolidated shares, representing 13.78% of DBE’s enlarged issued share capital post acquisitions and after adjusting for the proposed share consolidation.

DBE said the approval of the proposals will lead to a healthier balance sheet, where RM108 million cash will be raised from the placement, based on an indicative issue price of 80 sen.

DBE’s net gearing ratio will be drastically cut to 0.2 times from 0.6 after the private placement.

“Pertaining to the proposed acquisitions of the three companies, these three to be acquired companies’ aggregated profit after tax in 2019 was approximately RM127 million, with margins ranging from 25% to 30%.

“This will strengthen DBE’s financial performance in the current financial year ending Dec 31, 2020,” it noted.

“With the approval [of the resolutions], DBE will become one of the biggest affordable housing developers in Malaysia. With this significant milestone in DBE, I look forward to our bright future as we continue to work hard to bring the group to greater heights and create value for our shareholders,” DBE managing director Datuk Jimmy Doh Jee Ming said.

At 3.27pm, DBE remained unchanged at 3.5 sen, with a market capitalisation of RM85.12 million. The stock saw some 4.75 million shares traded.

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