YLI enters property development with RM28 mil Puncak Alam joint venture

PETALING JAYA (June 30): YLI Holdings Bhd is entering the property development space via a proposed joint development in Bandar Puncak Alam, Selangor, structured as a non‑related party transaction under Chapter 10 of the Main Market Listing Requirements.

It said in a Bursa filing yesterday that its wholly owned subsidiary, Yew Lean Industries Sdn Bhd (YLISB), had, signed a joint development agreement (JDA) with Puncak Alam Housing Sdn Bhd, the landowner, to undertake a development on a 10.963‑acre vacant parcel identified as Plot 1 along Persiaran Puncak Alam 3, Mukim Ijok, Daerah Kuala Selangor, Selangor Darul Ehsan.

Under the JDA, Puncak Alam Housing provides the land, while YLISB is granted sole and exclusive rights to develop it in accordance with the terms of the agreement.

Land and valuation

Plot 1 is presently composed of 94 individual parcels held under titles HSD 23819 to 23912 and PT 22591 to 22684, together with two plots of open/green area and road reserves, collectively making up the 10.963 acres.

The land is classified for building use with express conditions for business building, is leasehold for 99 years expiring on April 12, 2109, and is currently vacant.

An independent valuation by HASB Consultants Selangor Sdn Bhd values the land at RM28 million on a market value basis, using the comparison approach and treating it as a single 10.963‑acre vacant commercial parcel without taking into account the individual titles and road reserves.

Landowner’s entitlement and payment schedule

The landowner’s entitlement under the JDA is set at RM28 million, matching the valuer’s market value. YLISB will pay this entitlement to Puncak Alam Housing in five stages:

a) RM2.5 million upon execution of the JDA.
b) RM2.5 million within six months from the JDA date.
c) RM7 million within twelve months.
d) RM7 million within twenty‑four months.
e) RM9 million within thirty‑six months from the JDA date or within three months from issuance of the certificate of completion and compliance (CCC), whichever is later.

Subject to payment of the landowner’s entitlement, YLISB will be entitled to the joint development and all proceeds from it other than the RM28 million due to the landowner.

YLI will provide a corporate guarantee in favour of the landowner to guarantee settlement of the landowner’s entitlement, which is the principal liability arising from the JDA.

Development parameters and timeline

As at the date of announcement, the development has not commenced and key parameters — including the description and name of the project, gross development value and development cost — are still “to be determined”.

The group expects to fund the joint development via internally generated funds, although the JDA allows the land to be charged as security if the developer or its appointed contractor obtains project financing, subject to specified conditions.

The proposed joint development is expected to start once YLISB has obtained approvals from the relevant authorities, and to be completed within approximately 36 months from the JDA date, barring unforeseen circumstances.

Rationale and prospects

YLI states that the proposed joint development enables the group to diversify into the property development industry and broaden its earnings base without an outright acquisition of the land, thereby optimising capital deployment and enhancing its long‑term growth prospects.

It views the arrangement as a way to realise the value of land assets through joint development while facilitating strategic divestment from manufacturing and trading, construction and project management activities.

The board highlights the land’s location off Persiaran Puncak Alam 3, with connectivity to the North–South Expressway, Guthrie Corridor Expressway, New Klang Valley Expressway (NKVE), Damansara–Shah Alam Elevated Expressway (Dash) and Kuala Lumpur–Kuala Selangor Expressway (Latar), and notes the continued growth of Bandar Puncak Alam as an established township with increasing population catchment and demand for supporting commercial developments and amenities.

Subject to necessary planning and regulatory approvals and barring unforeseen circumstances, the proposed joint development is expected to contribute positively to future earnings, cash flows and net assets, and the board is of the opinion that it is expected to enhance shareholders’ value and is in the best interest of the company and its shareholders.

Percentage ratio, approvals and risk

The highest percentage ratio applicable to the proposed joint development is 19.66% pursuant to paragraph 10.02(g) of the Main Market Listing Requirements, which keeps it within Chapter 10 disclosure thresholds without triggering shareholder approval requirements.

YLI states that the proposed joint development is not subject to shareholder approval under the Listing Requirements, but remains subject to the usual planning and regulatory approvals required for property development.

The board identifies risk factors including business and operational risks inherent in property development, such as market demand, construction costs, labour availability and regulatory changes, as well as potential property overhang and non‑completion risk if parties fail to fulfil JDA conditions or timelines.

It says the group will take reasonable steps to ensure terms within its control are fulfilled in a timely manner and will implement appropriate measures to mitigate risks as and when they arise.

YLI confirms that none of its directors, major shareholders or persons connected with them has any direct or indirect interest in the proposed joint development, and the board recommends proceeding with the JDA after considering its terms, the valuation report and the strategic rationale.

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