Rhong Khen buys three Kapar factories for RM47 mil to streamline manufacturing

PETALING JAYA (July 8): Rhong Khen International Bhd (RKIB) is acquiring three factory properties in Kapar, Selangor, for RM47 million cash through its wholly owned subsidiaries Uptown Promenade Sdn Bhd (UPSB) and Latitude Tree Furniture Sdn Bhd (LTFSB).

The group, in a Bursa Malaysia filing yesterday, said that UPSB and LTFSB entered into three sale and purchase agreements (SPAs) on July 7, 2026, with Hsin Foong Manufacturer Sdn Bhd (HFMSB) and Kelana Sempurna Sdn Bhd (KSSB) for the purchases, which were announced as non-related party transactions under Bursa Malaysia’s Main Market Listing Requirements.

What is being acquired

The transaction covers three industrial properties along Batu 8–8¼, Jalan Kapar, 42200 Kapar:

1) Lot 512, Batu 8¼, Jalan Kapar, Kapar
A freehold two-storey office and single-storey factory building with an approximate built-up area of 108,000 sq ft on about 1.4594 hectares of industrial land. The registered proprietor is HFMSB. The agreed consideration is RM21 million. The property is subject to a charge in favour of Malayan Banking Bhd. RKIB said it is not privy to the latest net book value.

2) Lot 513, Batu 8¼, Jalan Kapar, Kapar
A freehold single-storey factory building with an approximate built-up area of 99,000 sq ft on about 1.4594 hectares of industrial land. The registered proprietor is HFMSB. The agreed consideration is RM17 million. There are no encumbrances. RKIB said it is not privy to the latest net book value.

3) Lot PT5906, Batu 8, Jalan Kapar, Kapar
A leasehold industrial property expiring on April 28, 2069, comprising a single-storey factory building with approximately 110,000 sq ft of built-up on about 1.0775 hectares of land. The registered proprietor is KSSB. The agreed consideration is RM9 million. There are no encumbrances. RKIB said it is not privy to the latest net book value.

Together, the properties provide additional office and factory space within close proximity to RKIB’s existing operations in Kapar.

Purchasers and vendors

UPSB is a wholly owned RKIB subsidiary with RM5 million issued share capital, based at Lot 3356, Batu 7¾, Jalan Kapar, and is principally an investment holding company. LTFSB, also wholly owned by RKIB and based at the same address, has RM3 million issued share capital and is principally involved in the manufacturing and sale of wooden furniture and components.

HFMSB, one of the vendors, is principally involved in the manufacture and export of wooden furniture parts, while KSSB is a property investment company wholly owned by HFMSB.

Key terms: Price, payment and conditions

The RM47 million purchase consideration will be satisfied entirely in cash under the following payment structure:

a) Deposit: RM10 million (including RM1 million earnest deposit) paid on July 7, 2026, upon execution of the agreements.

b) Balance: RM37 million to be paid within four months from the date of the agreements (the Completion Date), with a one-month extension period available (Extended Completion Date).

The balance purchase price is to be paid to the vendors’ solicitors as stakeholders. Any delay beyond the agreed timeline attracts interest at 6% per annum on the unpaid portion, calculated on a day-to-day basis until full payment.

The agreements also provide that, after 90 days from the date of the agreements and upon request from the vendors, the purchasers shall make an advance payment equivalent to 50% of the purchase price (inclusive of the deposit and real property gains tax retention sum) as part payment.

The transactions are subject to:

i) Consent to transfer of the properties from the relevant authorities in favour of the purchasers; and

ii) The required Foreigner Consent for the acquisition of the properties.

Once these consents are obtained, the transactions become unconditional and the balance payment timelines apply. The sale excludes machinery, plants, furniture and fittings belonging to the vendors.

Vacant possession is to be delivered within five days of the vendors’ solicitors receiving the balance purchase price. If vacant possession is delivered late, the vendors are liable for interest at 6% per annum until actual delivery.

The agreements contain default provisions, including termination rights and agreed liquidated damages in the event of breaches by either party.

Price basis and funding

RKIB said the purchase prices were arrived at on a willing-buyer, willing-seller basis after arm’s-length negotiations with the vendors, taking into account:

iii) Prices offered for similar factory buildings in the area; and

iv) Management’s estimate of market value based on enquiries with property agents familiar with industrial properties and factory land in the vicinity.

No formal valuation was carried out on the properties for the purpose of the acquisition.

The RM47 million consideration will be funded via a mix of internally generated funds and bank borrowings. The exact funding mix will be decided later, taking into account the group’s gearing level, interest costs and internal cash requirements.

Rationale and impact

RKIB said the transaction is consistent with its long-term strategy to consolidate its upstream and downstream furniture operations in Malaysia, with the aim of achieving greater cost efficiency over time. The group noted that the properties are located within about 1.5 km of its existing factories and head office, and said the location is expected to enable operational synergies, streamlined logistics and enhanced coordination across its business activities.

The transaction has no impact on share capital or substantial shareholders’ holdings and does not require shareholder approval, save for consents from relevant government authorities for the transfers. RKIB said no directors, major shareholders or persons connected to them have any interest in the transaction.

The company does not expect the transaction to have a material effect on its earnings per share, net assets per share or gearing for the financial year ending June 30, 2027. The highest percentage ratio for the transaction under Bursa’s Chapter 10 is 7.17% based on RKIB’s audited FY2025 financials, and the announcement is made pursuant to Paragraph 10.06 of the Main Market Listing Requirements. Completion is expected within four months plus a one-month extension from the date the relevant government approvals are obtained.

Ready-built factories prioritised over raw land

From a property perspective, the acquisition reflects an industrial real estate strategy centred on securing ready-built manufacturing facilities near existing operations, rather than a standalone land acquisition exercise. RKIB is using these Kapar factory purchases to support the consolidation of its furniture-related activities, in line with its stated emphasis on cost efficiency and operational synergies. While the company does not expect a material earnings per share  impact for FY2027, the transaction highlights how manufacturers can use industrial property deals to underpin logistics, capacity planning and long-term operating efficiency.

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