Luxchem invests in five leasehold plots in Klang for RM45.6m

• The five plots, measuring a total 40,340 sqm, come with a nine-year tenancy agreement that generates annual rental income of RM2.3 million. The lease includes a 10% upward rental revision every three years, providing a stable and recurring income stream that is expected to enhance the group’s cash flow visibility and earnings base over the medium term.

KUALA LUMPUR (July 15): Luxchem Corp Bhd (KL:LUXCHEM) is acquiring five leasehold industrial lands in Mukim Kapar, Klang, for RM45.59 million in cash, as part of its strategy to optimise surplus cash reserves by investing in income-generating real estate assets.

In a bourse filing Tuesday (July 15), the industrial chemicals and materials firm said its wholly-owned Luxchem Trading Sdn Bhd is acquiring three plots from Leisure Harvest Sdn Bhd and two plots from Excellent Delight Sdn Bhd, and have inked the sale and purchase agreements for the deals.

The five plots, measuring a total 40,340 sqm, come with a nine-year tenancy agreement that generates annual rental income of RM2.3 million. The lease includes a 10% upward rental revision every three years, providing a stable and recurring income stream that is expected to enhance the group’s cash flow visibility and earnings base over the medium term.

The proposed acquisition is expected to be completed in four months. Information on the lands' net book value was not disclosed.

The company said it is investing in the assets for higher long-term yield potential or future development opportunities, instead of retaining excess funds in fixed deposits with modest returns. As of March 31, 2025, Luxchem had cash and bank balances of RM243.97 million, while total borrowings stood at RM68.57 million. The acquisition will be financed through internal funds and bank borrowings.

No independent valuation was carried out but the purchase price of about RM1,130 per sqm is considered commercially acceptable based on verbal assessments by bank-appointed valuers and internal market reviews, Luxchem said.

The acquired parcels, classified as bare land, have undergone significant structural enhancement with heavy-duty flooring works to support its use as a container depot. Market comparables for similar industrial lands in the area without enhancement typically transact at RM850 to RM1,000 per sqm.

Luxchem’s shares closed half a sen or 1.2% lower at 40.5 sen on Tuesday, giving the company a market capitalisation of RM433.3 million. The counter is down over 20% year to date.

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