KUALA LUMPUR (Sept 15): Chin Hin Group Bhd's indirect wholly-owned unit Sage Evergreen Sdn Bhd (SESB) plans to acquire a RM22 million freehold land in Kota Tinggi, Johor, to cater to the group's production expansion plans.
In a filing with Bursa Malaysia, Chin Hin said SESB entered into a sale and purchase agreement with TKW Capital Sdn Bhd today for the planned purchase of the 20.37ha land.
Chin Hin said its existing precast concrete and autoclaved aerated concrete (AAC) blocks plant at Serendah, Selangor is running at its maximum capacity.
"Due to the insufficient capacity and growing demand as a result of higher adoption rate of AAC blocks and strong order books for precast concrete, the group has embarked on a production expansion plan to cater to rising needs.
"Chin Hin is going to set up a 45,000-tonne pre-cast concrete and a 600,000-m3 AAC block plant on the Johor land. The two plants in Johor are targeted to commence operations in the last quarter of 2017," it said.
Chin Hin will satisfy the purchase consideration through internally generated funds.
The Johor plants are expected to contribute positive earnings to the group by the last quarter of 2017.
The group expects further margin improvement, underpinned by higher contribution from its manufacturing segments, in particular the AAC and precast concrete segment, due to lower manufacturing costs owing to the advantage of economies of scale.
The proposed acquisition is expected to be completed by fourth quarter of 2016.
Chin Hin closed up half sen or 0.55% at 91 sen, valuing it at RM455.3 million.