KUALA LUMPUR(June 8): Poultry player Sinmah Capital Bhd (formerly known as Farm’s Best Bhd) is proposing to diversify its businesses to include property development and construction.

In a filing with Bursa Malaysia today, Sinmah said its wholly-owned subsidiary Sinmah Development Sdn Bhd has proposed a joint venture with Encorp Bukit Katil Sdn Bhd (EBKSB), a wholly-owned subsidiary of Encorp Bhd.

The JV company would then carry out a mixed development project on 77.94 acres of land located in Bukit Katil, Melaka.

The proposed development of the project land will comprise bungalows, semi-detached and link houses, and commercial units which will include a medical college and hospital.

The total estimated gross development value of the project is RM865 million.

Sinmah will hold 70% of the JV company and EBKSB the remaining 30%.

EBKSB currently has the development rights to the project land, as the Federal Land Development Authority (Felda) has appointed EKSB as the master developer.

For the purpose of the development, the JV company will pay RM69.65 million to EBKSB to acquire the development rights of the land.

The land cost is expected to be funded by the JV company via proceeds from a fund-raising exercise to be announced later, issuance of redeemable preference shares(RPS) by the company and internally-generated funds or bank borrowings.

Approximately 71% of the funding is expected to come from internal funds or bank borrowings, while 20% is expected to come from the fund-raising exercise and the remaining portion from issuance of RPS.

In the event the fund-raising exercise does not materialise, this amount will be fully financed using internally-generated funds or bank borrowings.

Pursuant to the development, Sinmah said that it anticipates that the group’s venture into property development and construction activities is likely to contribute 25% or more of the net profit of the group in the future.

After the proposed diversification, the group intends to continue with its existing broiler business components and to focus on property development and construction.

Farm’s Best securities will trade under the name of Sinmah Capital with effect from June 14. At market close today, the shares were down one sen (1.4%) to 72 sen, for a market capitalisation of RM43.98 million.