Friday 29 Mar 2024
By
main news image

KUALA LUMPUR (Nov 30): UMW Holdings Bhd, which returned to profitability in the third quarter ended Sept 30, 2018 (3QFY18), is disposing of its leasehold industrial land totalling 38.803 acres in Shah Alam, Selangor to Strategic Sonata Sdn Bhd, a wholly-owned subsidiary of Singapore's Mapletree Dextra Pte Ltd, for RM287.7 million.

UMW said the proposed disposal will enable the group to fully unlock and realise the value of its long-held assets in Shah Alam as part of its broader strategic thrust of sustainable value creation for shareholders.

"The proposed disposal will also facilitate the planned relocation of ongoing business operations in Shah Alam to the proposed UMW High Value Manufacturing Park in Serendah, Selangor. The migration of UMW Group businesses to Serendah provides a firm foundation for the group's next phase of growth and will also further strengthen and enlarge the emerging ecosystem for high-value, innovative manufacturing at the park," it added.

In the interim, the group will let part of the land from Strategic Sonata for a tenure of at least three years at a yearly rental totalling RM12.6 million, to ensure the group's ongoing business operations will continue without undue disruptions prior to the planned relocation to the UMW High Value Manufacturing Park.

In a filing with Bursa Malaysia today, UMW said the land comprises 10 lots held under separate documents of title and will be disposed of together with all remaining buildings, structures and plants.

"The disposal consideration is 3.16% above the average market value of the properties based on the independent valuation carried out by Messrs Raine & Horne International Zaki + Partners Sdn Bhd and Messrs C.H. Williams, Talhar and Wong Sdn Bhd," it added, noting that the group has invested some RM157 million for the properties from 1970 to 2014.

UMW said the expected gain from the proposed disposal is RM171.4 million. "The proceeds arising from the proposed disposal would be utilised to meet the working capital requirements."

Barring any unforeseen circumstances, the proposed disposal is expected to be completed by end of second quarter of 2019.

In a separate filing, UMW announced that it posted a net profit of RM128.13 million in 3QFY18 compared with a net loss of RM29.37 million a year earlier.

Quarterly revenue rose 25% to RM3.29 billion from RM2.64 billion in 3QFY17.

The improved performance is attributed to better contributions from all three of its core businesses.

The group said its automotive segment successfully capitalised on positive consumer sentiment during the goods and services tax holiday period between June and August, while the decision to focus on more urbanised sectors in the equipment segment led to higher sales with increased demand in the construction sector.

Meanwhile, its aerospace business continued to produce and deliver fan cases as per its contractual agreement with Rolls-Royce, generating higher revenue for the manufacturing and engineering (M&E) segment.

For the cumulative nine months (9MFY18), net profit stood at RM326.59 million versus net loss of RM218.5 million a year earlier, while revenue increased 6.6% to RM8.62 billion from RM8.09 billion.

"Our third quarter results positively reflect the continued execution of our strategic initiatives to restore profitability and momentum, following our exit from the oil and gas sector. We are encouraged by our performance and will continue to make strategic moves to keep our core businesses abreast of its changing environment.

"As we move forward, the group will place a sharper focus on driving long-term growth through expansion and fostering innovation across our portfolio, balanced with a disciplined approach to capital investment," said UMW president and group chief executive officer Badrul Feisal Abdul Rahim in a statement.

Going forward, UMW said the reintroduction of the sales and service tax will likely have an impact on consumer demand in vehicle sales, but it expects satisfactory performance for its auto segment based on the strong interest seen for its newly launched models.

Meanwhile, the industrial equipment business is expected to continue to perform well in the rental sector, while infrastructure development for coastal and rural roads could have a positive impact on the heavy equipment business.

The M&E segment is looking to increase its market penetration into other Asean countries for its lubricant business while the aerospace business is steadily increasing production to meet the expected orders from Rolls-Royce.

UMW shares closed up 7 sen or 1.41% at RM5.05 today, giving it a market capitalisation of RM5.9 billion.

      Print
      Text Size
      Share