Hock Seng Lee acquires land for Samariang project

KUALA LUMPUR (Mar 7): Hock Seng Lee Bhd (HSL) has entered into a sale and purchase agreement with Projek Bandar Samariang Bhd for the acquisition of a 275.5-acre (110.2ha) piece of leasehold land near Kuching, Sarawak for RM25.55 million cash.

In an announcement to Bursa Malaysia on Tuesday, the group said the land in the Bandar Samariang township was purchased via its wholly-owned subsidiary, HSL Construction, for around RM93,000 per acre or RM2.10 per sq ft.

"The land is proposed to be developed into a mixed commercial and residential development named Samariang Aman 3 and will form a continuation of Hock Seng Lee's renowned completed Samariang Aman and recently launched Samariang Aman 2," it said.

This development is expected to generate an estimated gross development value of RM700 million. The group was unable to disclose the net book value of the land as it "is not privy to this information", according to the announcement.

The group added that based on preliminary plans which are subject to approval, the development will offer about 1,500 landed residential homes comprising a mix of semi-detached, quadruplex and terraced houses, 2,000 units of affordable housing and 40 commercial shophouses.

Work on the project is expected to commence in 2013 and will last for between six and eight years. The total development cost and expected profits that the group can derive from the project are yet to be estimated and ascertained, the company said.

In a note to clients on Tuesday, RHB Research Institute said the acquisition price seems to be attractive as land for township development in Kuching ranges from RM160,000 per acre to RM750,000 per acre based on the research house's quick check.

"We are positive on the latest land acquisition that will boost Hock Seng Lee's landbank by a whopping 44% from about 625 acres to 900 acres," said the research house.

It added that the group's landbank primarily consists of a 70-acre Samariang Aman 2, 200-acre La Premenade township project and 200 acres of Bintulu land.

HSL closed on Tuesday at RM1.71, just one sen lower than its six-month high closing on March 5. A total of 431,600 shares changed hands.