KUALA LUMPUR (Mar 11): Hap Seng Consolidated Bhd today proposed to dispose of its wholly owned unit Hap Seng Capital Pte Ltd to Lei Shing Hong Ltd (LSH), a related party, for RM640.8 million cash.

It also proposed to acquire a 14-storey retail and office tower block to be known as Menara Hap Seng KK being constructed on a parcel of leasehold land in Kota Kinabalu, from Akal Megah Sdn Bhd, for RM395 million cash.

LSH is a 17%-indirect shareholder of Hap Seng Consolidated (fundamental: 1.3 ; valuation: 2.1), through wholly owned subsidiary Lei Shing Hong Investment Ltd.

In its announcement to Bursa Malaysia this evening, it said the proposed disposal is expected to give rise to a gain of approximately RM513.19 million to the Hap Seng group for the financial year ending Dec 31, 2015.

The proceeds from the sale will be utilised for the proposed property acquisition and working capital.

It said the proposed disposal represents an opportunity for the group to divest its credit finance business in Singapore at an attractive gain, adding that it believed the acquisition is a sound investment proposition.

Both proposals are subject to shareholders’ approval.

Hap Seng Consolidated shares closed down 0.26% at RM3.79 today, bringing a market capitalisation of RM8.12 billion.

(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.)