Friday 29 Mar 2024
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GEORGE TOWN (Aug 19): Compugates Holdings Bhd is teaming up with a Penang-based privately-held property developer to transform a 38.3-acre piece of land in Dengkil, Selangor, into a mixed development with a gross development value (GDV) of RM1.5 billion.

The proposed mixed development will comprise service apartments or small office/home office/virtual office/flexible offices.

In a filing with Bursa Malaysia today, Compugates said its 70%-owned subsidiary, Compugates Development And Mining Sdn Bhd (CDMSB), had signed a joint venture (JV) agreement with Main Uptown Sdn Bhd yesterday (Aug 18), for the proposed joint development of the land. The remaining 30% shareholder of CDMSB is Datin Sabariah Dahlan.

Under the JV, Main Uptown will undertake and carry out the overall development and construction on the land into a commercial development. CDMSB is the owner of the parcel of land held under a 99-year leasehold title. The carrying value of the land as at Dec 31, 2014 was RM100 million, as appraised by independent valuer Irhamy & Co.

"Based on the market values of the commercial properties in vicinity of the project, barring any unforeseen circumstances, the combined GDVs of all phases of the project upon completion, shall not be less than RM1 billion, but Main Uptown shall use all commercially-reasonable effort to achieve a targeted combined GDVs of RM1.5 billion, more or less," said Compugates.

Compugates said it has teamed up with Main Uptown, because the latter has the technical expertise, knowledge and experience in carrying out and completing development projects.

"Compugates (also) sees the potential to unlock the value of the land, valued at RM100 million, for a minimum return of RM220 million (or equivalent to 22% of the combined GDVs of RM1 billion), with a targeted return of RM330 million or more, depending on the GDV upon completion of the project, which Compugates is entitled to 22% as the land owner," it said.

"By entering into this JV agreement and working together with Main Uptown, Compugates sees a very high potential, as it will create long term recurring income to the group," it added.

The proposed project will be completed by Main Uptown within 10 years from the date of the company obtaining the first building plan approval, in respect of first phase of the project.

Compugates also said the proposed JV is expected to contribute to the earnings of the group, after the financial year ending Dec 31, 2015.

"(We) see very high prospects in this proposed JV, as its surrounding developments have begun to take place, such as MCT Bhd’s projected RM6.5 billion Cybersouth project located in very close proximity to the land," it added.

Compugates (fundamental: 0.8; valuation: 0.9) shares closed unchanged at five sen today, giving it a market capitalisation of RM106.7 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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