LSH Capital jumps 19% after announcing deals to expand into property and construction

LSH Capital jumps 19% after announcing deals to expand into property and construction
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KUALA LUMPUR (March 29): Lim Seong Hai Capital Bhd (LSH Capital) saw its shares surge 19.05% or eight sen to 50 sen on Tuesday (March 29), following the group's Monday announcement of a series of corporate proposals to expand into the property development and construction segments.

The counter, which was among the top gainers, saw 5,000 shares traded.

The stock was suspended on Monday.

The group announced on Monday that upon completion of the proposals, it will have an enlarged secured construction order book amounting to RM1.1 billion in aggregate with an overall outstanding order book of RM782 million and also carry a property development project with a gross development value (GDV) of RM1.59 billion, which is expected to provide earnings visibility until 2026.

In addition, LSH Capital will also be involved in construction and property development projects amounting to RM2.7 billion via BEST Framework collaboration. The collaboration would enable the group to earn certain portions of fees for various value-creation efforts.

The corporate proposals entail a combined acquisition value of RM157.6 million via the execution of a share sale agreement to acquire 100% of Astana Setia Sdn Bhd for RM95 million, asset exchange agreement and debt settlement cum share subscription agreement with LSH Ventures Sdn Bhd for a total value of about RM62 million to be fully satisfied via issuance of new LSH Capital shares at 45 sen, which presents a premium of 7.14% to 9.2% over the closing market price on March 25, 2022 and the volume-weighted average price of six months.

Astana Setia has an existing GDV of RM395.9 million in its Residensi Laman Segar Hijau (LSH Segar) development project in Taman Segar, Cheras. The flagship project has secured 100% uptake under the RUMAWIP affordable housing scheme, and 70% uptake among open units.

Astana Setia also has an external construction order book of RM390.81 million, of which RM146.82 million is still outstanding.

Meanwhile, the proposed transaction with LSH Ventures involves the acquisition of four parcels of lands and buildings on-site in locations across Kuala Lumpur, Kajang in Selangor and Johor Baru for a consideration of RM8.14 million.

In addition, LSH Capital will settle an amount of approximately RM54 million owing to directors of LSH Ventures.

Upon completion, LSH Capital will own 99% of LSH Ventures and have 93.75% effective interest in Astana Setia and Euro Saga Sdn Bhd, an entity which will launch its upcoming flagship project “Lake Side Homes” on an 11.85-acre land in Sungai Besi, with an estimated GDV of RM1.19 billion.

LSH Capital will also seek shareholder approval to expand its core businesses to include property and construction-related businesses, and these new integrated upstream businesses are expected to contribute more than 25% of the group’s net profit moving forward.

“The latest exercises put the group on the right track towards strengthening its presence in the local construction and property development sectors and to become a billion-ringgit company in the long run,” said LSH Capital non-executive chairman Tan Sri Lim Keng Cheng.

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