This article first appeared in The Edge Financial Daily on July 5, 2017

KUALA LUMPUR: Sinmah Capital Bhd is selling four pieces of land, together with 22 broiler farms, a chicken processing plant and a two-storey shophouse, in Batu Pahat, Johor for a combined RM12.33 million cash, as part of its plans to dispose of certain assets which it deems to be no longer necessary to its poultry division operations.

Sinmah said the total disposal consideration represents a discount of 0.58% to the total market value of RM12.41 million. The total original costs of investment by Sinmah in relation to the four assets were RM8.34 million.

As such, it expects to net a total pre-tax profit on disposal of RM8.07 million, which will be used to strengthen the group’s cash flow and reduce its gearing.

In a filing with Bursa Malaysia yesterday, Sinmah said its 51%-owned subsidiary Syarikat Perniagaan Suann Sdn Bhd had entered into four sale and purchase agreements to dispose of the four assets to PTS Poultry Processing (BP) Sdn Bhd, which is involved in the supply of chicken, poultry meats, frozen food, vegetables and groceries.

Asset 1 comprises a piece of agricultural land measuring 261,360 sq ft, together with nine open broiler sheds, which is being sold for RM1.65 million, while a 108,078 sq ft land, together with 13 open broiler sheds (Asset 2), goes for RM1.03 million.

Asset 3, which incorporates a 2.4ha industrial land, together with factory, office, canteen, workshop and a chicken processing plant, is being sold for RM9.23 million and Asset 4 comprising a 604 sq ft land with a two-storey shophouse is going for RM425,527.

“The group will continue its poultry-related operations in the trading of broiler and contract farming business, feedmill operations in addition to its property division. Thus, the proposed disposals are not expected to have a significant impact on the group’s business or operations,” said Sinmah.

It added that the proposed disposals will help unlock the value of the four assets.

Sinmah said the proposed disposals are expected to be completed by the fourth quarter of 2017.

Sinmah shares closed one sen or 1.32% lower at 74.5 sen yesterday, with a market capitalisation of RM45.51 million.