KUALA LUMPUR (July 28): Jiankun International Bhd is partnering with the landowner to develop a piece of freehold land measuring approximately 0.81ha in Daerah Petaling, Selangor, into a 377-unit serviced apartment with an estimated gross development value (GDV) of RM180 million.
In a filing to Bursa Malaysia today, Jiankun said its wholly-owned unit JKI Development Sdn Bhd has entered into a joint venture (JV) agreement with the landowner Five Star Development (Puchong) Sdn Bhd to develop the tract.
Under the agreement, Five Star agrees to grant JKI the exclusive right to develop and construct the proposed development in return for 20% of the GDV, estimated to be RM36 million.
Jiankun said the development also comprises facilities, amenities and infrastructure for the serviced apartments.
The sole cost and expense of construction will be borne by JKI, which is estimated to be RM147.20 million, inclusive of Five Star’s entitlement, according to the filing.
Jiankun said the construction cost of the JV is expected to be funded via a combination of bank borrowings and proceeds from its rights issue on Dec 31, 2014.
The JV shall commence today and Five Star shall deliver vacant possession of the said land to JKI upon the execution of the JV agreement, free from all encumbrances, to enable JKI to start earthworks for the project.
“The JV will [enable] JKI and Jiankun to participate in high rise property development as well as contribute positive revenue and earnings in future,” Jiankun said.
While the JV will not have any material effect on its net assets per share and gearing for the financial year ending Dec 31 (FY15), Jiankun said future earnings to be derived from the JV are expected to contribute positively to its net assets per share.
Jiankun (fundamental: 0.6; valuation: 0.9) closed 1.5 sen or 5.17% lower at 27.5 sen today, for a market capitalisation of RM43.99 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.)