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Merger between Nadayu and Tambun Indah?

KUALA LUMPUR: Nadayu Properties Bhd and Tambun Indah Land Bhd have both requested that the trading of their shares be suspended today pending release of a material announcement.

Speculation has it that both property developers, which are active in the northern region especially Penang, may be looking at a merger to gain strength.

Nadayu's share price shot up 18 sen or 16.22% yesterday to close at RM1.29, giving it a market capitalisation of RM293.5 million. Meanwhile, Tambun Indah's shares closed unchanged yesterday at RM1.37, though the stock has risen 82% year-to-date. Tambun Indah has a bigger market capitalisation of RM436.5 million.

A potential merger and acquisition between Nadayu and Tambun Indah came amid heightened interest in the local property development sector, which saw share prices of not just major developers, but also mid-small cap property counters, reaching record high.

Just yesterday, shareholders of Malaysian Resources Corp Bhd voted in favour of a RM729 million corporate exercise to acquire certain units of the Gapurna group, while plantation giant IOI Corp Bhd recently announced plans to list its property unit with total assets of RM18.5 billion.

Market observers said a merger of some sort between Nadayu and Tambun Indah could be a good fit as both have strong presence in the north. This is especially true for Nadayu which has been relatively under-researched by the investment community compared with Tambun Indah.

Nadayu, which is also active in the Klang Valley, owns 260 acres of development landbank in Seberang Prai, Penang, which it acquired in 2001. Its currently carried at a net book value of RM103.6 million.

The land is deemed strategic as it is near the second Penang bridge while Tambun Indah owns 699.4 acres of land in Penang, including valuable pockets of land on the island.

According to Tambun Indah's latest annual report, the company has RM256 million worth of projects slated for launch this year, and about RM1.9 billion gross development value (GDV) worth of properties in the pipeline.

Nadayu did not disclose GDV figures in its latest annual report.

Nadayu's major shareholder is ATIS IDR Ventures Sdn Bhd which has a 61.72% stake and Zhuojian Associates Sdn Bhd with 7.93% as at April 22 this year.

ATIS is the vehicle of Nadayu's executive chairman Hamidon Abdullah and deputy executive chairman Chen Khai Voon, while Zhuojian is linked to executive director Lim Beng Guan and his team behind ZJ advisory.

Tambun Indah's major shareholders are managing director Teh Kiak Seng with a direct and indirect stake of 46.6% and non-executive director Tsai Yung Chuan with 10.69% stake.


This article first appeared in The Edge Financial Daily, on June 21, 2013.

 

 

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