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KUALA LUMPUR: Cash-rich Oriental Holdings Bhd (OHB) is buying property in Bangkok to expand its hospitality business.
The group entered into a share sale and purchase agreement to buy into Pak Suanplu Holdings Co Ltd, which owns a serviced apartment block in Bangkok, for 1.5 billion baht (RM150 million), OHB said in an announcement to Bursa Malaysia.
The serviced apartments are situated on 6,555 sq m of land. The development comprises 235 units and is managed under the Somerset brand.
"The acquisition will allow the group to own the apartments via Park Suanplu. The board believes that the acquisition represents a good opportunity to expand its hospitality division, which in turn will enhance its long-term value and profitability to the group," the statement said.
The sum paid represented the agreed value of the apartment block and land, inclusive of taxes and all fixed and soft furnishings required to be run as a serviced apartment, said OHB.
The acquisition was done through OHB's flagship Kah Motor Co Sdn Bhd. Kingdom Properties Co Ltd, a wholly-owned subsidiary of Kah Motor, acquired 49% of Park Suanplu for RM38.77 million.
The rest of Park Suanplu was acquired for RM40.36 million by Suanplu Bhiman Ltd, in which Kingdom Properties has a 49% equity stake.
Kah Motor acquired all 4.3 million shares with a par value of RM10 each of Park Suanplu from STC Capital Holdings Co Ltd, Garden View Terrace Co Ltd and Grand Will Properties Ltd.
"The board of directors having considered all aspects of the acquisition is of the opinion that the said acquisition is in the best interests of the company as it is synergistic to the hospitality division of the group," said OHB.
This is the second acquisition that the group has made in less than three months. In July, it acquired 24,300ha in southern Sumatra for RM25 million to expand its oil palm plantation business in Indonesia.
As of June 30, OHB stood on a cash pile of RM2.84 billion with borrowings of RM10.8 million.
Its automotive segment contributed a bulk of the revenue, generating RM806.7 million or nearly half of the group's revenue of RM1.64 billion for 6MFY11 ended June 30, followed by the plantation division that recorded a revenue of RM267.5 million. Its hospitality division raked in RM89.5 million or 5.4% of total revenue.
The plantation division is the largest profit earner, recording a pre-tax profit of RM112 million, representing 44% of the group's pre-tax profit of RM254.7 million.
OHB has planted area of about 38,000ha which is almost the size of IJM Plantations Bhd's estates.
For its 2QFY11, net profit more than tripled to RM104.1 million from RM22.5 million a year ago as revenue rose 8.9% to RM850.5 million from RM780.6 million.
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