KUALA LUMPUR (June 4): Denko Industrial Corp Bhd said its wholly-owned subsidiary Lean Teik Soon Sdn Bhd (LTS) has entered into a sale and purchase agreement (SPA) with G2 Gold (M) Sdn Bhd for the disposal of a piece of leasehold land in Pulau Pinang for RM7.65 million.

In a filing with the bourse, Denko (fundamental: 0.35; valuation: 0.9) said it will record a gain of RM5.4 million upon the disposal of the property.

The land disposed includes a two-storey office and a factory building, and was initially acquired for RM2.5 million on March 15, 2011.

“The property was purchased by LTS for its office cum warehouse. However, LTS had since May 2014 outsourced its entire warehousing and logistics functions to an offsite third party service provider leaving the warehouse area largely empty.

“Upon the disposal of the property, LTS only intends to relocate its office and is currently in the midst of identifying a suitable site and location,” it said.

The company intends to use the proceeds from the disposal to repay its borrowings and for working capital purposes.

“Barring any unforeseen circumstances and subject to the fulfilment of all the conditions as set out in the SPA, the proposed disposal is expected to be completed within nine months from the date of the SPA,” said the company.

Denko closed 4 sen or 14.04% higher at 32.5 sen, with a market capitalisation of RM29.77 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.)