Sapura Industrial proposes RM10.48 mil disposal of Melaka industrial land to unlock capital gains

PETALING JAYA (June 4): Sapura Industrial Bhd (SIB) has proposed to dispose of a vacant leasehold industrial land in Ayer Keroh, Melaka, to Loongsen Plastics (M) Sdn Bhd for RM10,477,260 in cash.

In a filing with Bursa Malaysia today, the company said it had executed a letter of offer with the purchaser for the proposed disposal of the 2.163-hectare industrial land. The property is held under a 99-year lease expiring on Oct 22, 2073, and identified under H.S.(M) 549, Plot 98, Mukim Bukit Katil, Tempat Ayer Keroh, Daerah Melaka Tengah, Negeri Melaka.

The company said the proposed disposal would enable it to realise the capital appreciation of the asset, which was originally acquired for plant expansion in Melaka. The board considered it timely to monetise the non-core asset, particularly in light of future expansion plans in locations closer to its customers.

Upon completion, the proposed disposal is expected to result in a gain on disposal of approximately RM7.3 million. However, it is not expected to have any material effect on the group’s earnings per share, net assets per share or gearing for the financial year ending January 31, 2027.

The sale consideration was arrived at on a willing-buyer willing-seller basis after taking into account, among other factors, the location and market value of the property. An independent valuation conducted by Raine & Horne on April 20, 2026 assessed the land's market value at RM10,480,000 using the comparison approach.

The property had an original cost of RM3,174,947.74 as at February 9, 1991 and a net book value of RM2,212,228.94 as at January 31, 2025. The land is currently not charged to any financial institution. It is presently tenanted, generating monthly rental income of RM2,940.

Loongsen Plastics, incorporated in Malaysia on March 5, 1982 (the purchaser), is principally involved in the manufacture of polythene bags and operates at No. 73 & 74, Jalan Usaha 8, Kawasan Miel, Air Keroh Industrial Estate, Melaka (which is in the same industrial estate as the land being purchased). Its directors are Lai Chin Huang, Pang Fong Peng and Lai Teck Sian, who are also shareholders of the company.

The proposed disposal remains subject to the execution of a sale and purchase agreement (SPA) — which has not yet been executed as at the date of the announcement — and the fulfilment of conditions precedent, including obtaining approval from the relevant state authority for the transfer of the property.

Should the purchaser seek financing for the acquisition, approval would also be required for the creation of a charge over the property in favour of its financier.

Under the proposed terms, the purchaser is required to pay a deposit equivalent to 10% of the sale consideration upon execution of the SPA, with the remaining 90% payable within 90 days from the fulfilment of the conditions precedent. A further 30-day extension may be granted, subject to interest at 8% per annum calculated on a day-to-day basis.

SIB said the proceeds from the proposed disposal, after deducting related expenses, will be utilised for capital expenditure to expand production lines for new projects within 24 months of receipt. The funds may also be used to support future expansion plans, strategic initiatives and general working capital requirements.

SIB noted that none of its directors, major shareholders or persons connected to them have any direct or indirect interest in the transaction. Shareholder approval is not required as the applicable percentage ratios for the proposed disposal do not exceed the 25% threshold stipulated under Chapter 10 of Bursa Malaysia's Main Market Listing Requirements.

The board said it is of the opinion that the proposed disposal is in the best interests of the company. Further announcements will be made as and when there are material developments.

..........

EdgeProp brings you another month of data-driven insights, exclusive interviews, and market commentaries. Subscribe now for your free copy!