KUALA LUMPUR (Mar 20): Eastern & Oriental Bhd (E&O) announced that it is entering into a joint venture with Japan’s Mitsui Fudosan Co Ltd (Mitsui) to jointly develop a 298-unit serviced apartment project on a piece of freehold land in Kuala Lumpur.
According to E&O's filing with Bursa Malaysia this evening, E&O’s indirect wholly-owned subsidiary Samudra Pelangi Sdn Bhd and Mitsui’s indirect wholly-owned subsidiary Mitsui Fudosan Asia Pte Ltd (MFA) entered into a shareholders' agreement to develop the 5,812 sq m land through Patsawan Properties Sdn Bhd (Patsawan).
The land, located at the intersection of Jalan Kia Peng and Jalan Conlay where a double-storey mansion is now seated, is held by Patsawan, which is a wholly-owned subsidiary of Samudra. Patsawan has already obtained the development order for the project from local authorities.
E&O said the shareholders' agreement was executed simultaneously with the execution of a sale and purchase agreement, dated March 20, 2015, between Samudra and MFA for the disposal by Samudra to MFA of a 49% stake in Patsawan (or 68,600 ordinary shares of RM1 each) for RM82.37 million.
Of that, RM53.92 million was consideration for the sale of the equity stake while RM28.46 million was for a loan to be advanced by MFA to Patsawan to repay an existing loan that was granted by Samudra to Patsawan.
E&O (fundamental: 1, valuation: 0.6) expects to realise an estimated one-off gain of approximately RM48.8 million from the proposed stake disposal.
"The proposed disposal is expected to contribute additional earning of approximately RM0.04 per share to the E&O Group for the financial year ending 31 March 2015. In addition, the proposed development on the land is also expected to contribute positively to the future earnings of the E&O Group," the filing noted.
The proposed disposal is expected to complete on Mar 27, 2015, while the proposed development of the land is to start in the third quarter of 2015.
E&O closed down 1 sen at RM2.1 today, giving it a market capitalisation of RM2.55 billion.
(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)