KUALA LUMPUR (June 10): Property developer Land & General Bhd announced that its wholly-owned unit Victory Vista Sdn Bhd has signed a share sale agreement to acquire Pembinaan Jaya Megah Sdn Bhd – which will own 112.353 acres of land in Selangor – for RM90 million cash.

Land & General, in a filing with Bursa Malaysia today, said its proposal to acquire Pembinaan Jaya Megah will expand its land bank, which will facilitate future development projects that will contribute positively to its future earnings and cash flows.

Pembinaan Jaya Megah is currently alienating 112.353 acres of a 99-year leasehold land in Bukit Raja, Selangor from Petaling’s Land and District Office (PTP).

“On Nov 5, 2014, PTP has given its approval for the alienation of the Land and pursuant to the PTP approval, the leasehold period is 99 years and the expiry of the lease period is not yet not available pending completion of the alienation of the Land and issuance of land title(s),” said Land & General.

Selangor royalty Tengku Sulaiman Shah Al-Haj Ibni Almarhum Sultan Salahuddin Abdul Aziz Shah Al-Haj owns a 30% stake in Pembinaan Jaya Megah, while the remaining 70% interest are held by Datuk Hui Swee Seong and family members.

For the financial year ended Sept 30, 2014 (FY14), Pembinaan Jaya Megah – which has not commenced business operation – reported a RM35,720 each in deficits in shareholders’ funds and net liabilities.

According to its annual report 2013, Land & General has some 31ha of land for development, with a net book value of RM38.06 million.

“The land is intended to be developed as a residential and commercial development. The board, having considered the proposed acquisition including but not limited to rationale and justifications, financial effects, valuation and associated risks, as well as the prospects of the land to be alienated for future development, is of the opinion that the proposed acquisition is in the best interest of the Land & General Group,” it said in a filing.

Land & General said it will fund the purchase via internally generated funds, or external bank borrowings. As at March 31, 2015, Land & General’s deposits, cash and bank balances stood at RM398.34 million.

Land & General (fundamental: 3; valuation: 3) expects to complete the acquisition by the second quarter of 2016 (2Q16).

Land & General also has interest in oil palm and rubber plantations operated via its wholly-owned unit Clarity Crest Sdn Bhd. The group currently has some 1,009.71ha of land in Mukim Kerling, Selangor, that has a net book value of RM48.14 million.

The stock has fallen 13% from 57 sen on April 17 to close at 49.5 sen today, giving it a market capitalisation of RM534.817 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)