Malton buys Gombak land for residential project

KUALA LUMPUR (Nov 15): Property developer Malton Bhd has acquired a 56.05-acres parcel of land in Gombak, Selangor, for a total consideration of RM105 million (RM43 per sq ft) for a proposed residential development with an estimated gross development value (GDV) of RM500 million.

The company said its wholly-owned subsidiary Gapadu Harta Sdn Bhd entered into a sale and purchase agreement on Nov 10 to acquire the land from Ukay Spring Development Sdn Bhd (USDSB). The land will be developed by a joint venture comprising Gapadu Harta, USDSB and Liong Kok Wah.

Malton said the total purchase consideration will be fulfilled with a RM9.03 million deposit to be submitted upon the purchase of the land and a payment of RM36.7 million under the joint venture.

Another RM14.4 million will be satisfied in cash while the remaining RM44.7 million will be paid by way of contra with Malton's existing properties based on the sale price.

It said the acquisition may be financed by internally-generated funds or bank borrowings, or a combination of the two.

"The acquisition, which will increase the landbank for development, is in line with the expansion plan of the core business activities of the Malton group, which are property development and construction," Malton said in an announcement to Bursa Malaysia on Monday.

It added that the acquisition is expected to contribute to its medium- and long-term profitability and growth.

The acquisition, which is expected to be completed within FY12 ending June 30, will not have any material impact on its earnings per share and net assets per share for the current financial year. It is not subject to the approval of the company's shareholders, added Malton.

It said the proposed development comprises residential bungalows, semi-detached houses, medium-cost, low-medium-cost and low-cost apartments.

The company said the proposed development is in the initial stages of planning and commencement is still subject to approval from the relevant authorities.

It added that revenue from the development would be dependent on the level of economic growth, development in the vicinity, interest rates and the marketability of the development, as well as its accessibility.

The land is situated in a maturing residential area with established neighbourhood such as Ukay Perdana, Taman Zooview, 20trees, Taman Melawati, Wangsa Maju and Taman Setiawangsa.

Malton sat on a cash pile of RM207.1 million as at June 30, with RM115.1 million in bank borrowings.

For its 4QFY11 ended June 30, net profit more than quadrupled to RM26.8 million from RM5.54 million the previous year. Revenue for the quarter rose 95.2% to RM167.9 million from RM86.02 million.

"The group's improved earnings  were largely due to contributions from the group's property division, which achieved higher sales and better margins from its development projects and continuous cost savings, and re-engineering exercise carried out by the group," said Malton.

Revenue from its property development division rose from the year before due to higher revenue recognition from the advanced stages of construction of ongoing projects and new projects launched during the year.

Malton shares remained at 61.5 sen with 6.81 million shares traded on Monday. The stock has lost 15.7% year-to-date.