SHAH ALAM: Kumpulan Hartanah Selangor Bhd (KHSB) sees the proposed takeover and privatisation of the firm by the Selangor government's investment arm, Kumpulan Darul?Ehsan Bhd (KDEB),?as an advantage. The move will enable KHSB to work more closely with the state government.
KDEB has proposed to acquire a 56.57% stake in KHSB from its subsidiary, Kumpulan Perangsang Selangor Bhd (KPS),?for RM193.4 million cash or 76 sen per share.
The exercise, which will see KHSB become a direct subsidiary of KDEB, will trigger a mandatory general offer for the rest of KHSB shares. KDEB has also stated its intention to delist KHSB from Bursa Malaysia upon meeting the necessary acceptance level and requirements.
KDEB currently?controls 61% of KPS, which in turns owns?56.57% of KHSB.
"As?the offer is being made by KDEB, which is wholly owned by the Selangor government,?we will have a closer working relationship with the state upon completion of the exercise," said KHSB chairman Raja Idris Kamarudin after the company AGM yesterday.
The proposed takeover of KHSB by KDEB is expected to be completed by the end of July. According to Raja Idris, the exercise will give the state government direct control of KHSB, whose prime assets include 2,155ha of land in Pulau Indah.
KHSB is currently identifying new development projects, said Raja Idris, adding that there will also be a change in the company's business model.
"Moving forward, we?will be looking at developing projects by ourselves, so we will have more control over the projects.
"We will be doing fewer joint ventures [JVs] in the future.?In the past, there were?too many failed JVs, and non-payment of profits by JV partners, which even resulted in the forfeiture of land."
He said many cases involving the group's ventures are still pending in court.
"If KHSB were to be involved in?any JV, it would have to be in a different business model, unlike in the past when we were mainly dealing with land sales,"?he said.
Raja Idris said KHSB, which has a total landbank of 2,833ha, will concentrate on its projects at Section 14 in Petaling Jaya; the Pulau Indah Industrial Park; Selangor Halal Hub; and Pulau Indah East, which has the highest gross development value at RM6 billion.
He said KHSB will also look?into mergers and acquisitions starting next year.?"We have already started looking at some plots of land which are not owned by us as we find them strategic."
The company, however, is not in talks with any landowners?at the moment, he said.?
For the 2012 financial year ended Dec 31 (FY12), KHSB's revenue fell sharply to RM72.68 million, from RM169.73 million in FY11. This was mainly due to lower revenue recognition from property development. Nonetheless, the group posted a much narrower loss of RM3.32 million in FY12 compared with a loss of RM39.73 million in FY11.
KHSB returned to the black in the first quarter of 2013 (1QFY13) as the developer received other income in the form of compensation from a local authority.?In a filing with Bursa, the group said it registered net profit of RM2.62 million on revenue of RM1.86 million for 1QFY13.
This article first appeared in The Edge Financial Daily, on June 21, 2013.